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Reid says Senate will not extend farm law despite threat of milk prices rising

WASHINGTON - Government dairy subsidies that affect the cost of a gallon of milk are set to expire at the end of the year as farm-state lawmakers said Tuesday that they do not expect to have a new farm bill — or an extension of current law — before Jan 1.

Expiration of the current dairy subsidies triggers 1930s and 1940s law, outdated statutes that could upend the commercial dairy market and eventually cause the price of milk to rise. But Senate Agriculture Chairwoman Debbie Stabenow, a Democrat, said she has assurances from the Agriculture Department that the price spikes would not happen before the end of January, and she and House Agriculture Chairman Frank Lucas, a Republican, say they hope to have a final farm bill deal by then.

The House and Senate have passed separate versions of the five-year, roughly $500 billion bill, but with widespread differences over crop subsidies and how much to cut food stamps.

"We will be ready to vote in January," Stabenow said after a meeting with Lucas Tuesday.

House Speaker John Boehner said last week that he favours an extension, and House leaders have reserved space on their agenda this week for extending the current law.

But Senate Majority Leader Harry Reid balked at that plan. "Let them vote on it. We're not going to do it," he said Tuesday.

Stabenow said a short-term extension could allow subsidies called direct payments to continue. Those subsidies are paid to farmers whether they plant or not and have come under political fire from conservatives and others who have lobbied for less spending on farm programs. Both the House and Senate farm bills would eliminate the subsidies and create new ones.

Finding a compromise on cuts to the nation's $80 billion-a-year food stamp program has been the toughest obstacle in the talks between the House and the Senate. The House passed a bill this summer that would cut $4 billion from food stamps annually and allow states to create new work requirements for some recipients. The Democratic Senate, backed by President Barack Obama, passed a farm bill with a $400 million annual cut, or a tenth of the House cut.

Negotiators have focused on cracking down further on a practice in some states of giving low-income people as little as $1 a year in home heating assistance, even when they don't have heating bills, in order to make them eligible for increased food stamp benefits. The Senate found its $400 million in annual cuts by proposing that states have a $10 heating assistance threshold for such eligibility, while the House doubled that cut by requiring that recipients receive $20 annually — bringing the savings to around $800 million a year.

North Dakota Sen. John Hoeven, a Republican who sits on the House-Senate conference committee, confirmed that negotiators have floated as a compromise $800 million in annual cuts plus pilot programs that would create new work requirements in a handful of states. But he stressed that there is not a final deal.

Hoeven said he agreed that the Senate should not pass an extension.

"We want to keep the pressure on to get a farm bill done," he said.

Negotiators are also working out how farm subsidies should be restructured in the absence of the direct payments. The two chambers have argued over how to replace those payments, with major farm groups squabbling over whether subsidies should kick in based on crop prices or farmer revenue, and how to count the acreage on which the subsidies are based.

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Follow Mary Clare Jalonick on Twitter: http://twitter.com/mcjalonick

The Canadian Press


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