photo credit: Flickr CC via www.bluewaikiki.com
“Politics is supposed to be the second oldest profession. I have come to realize that it bears a very close resemblance to the first.” — Ronald Reagan
Legislation to avert the “fiscal cliff” passed late Tuesday. With it we also got a last minute farm bill policy.
After months of bickering and in-fighting, agriculture committee policy-makers were unsuccessful in passing a new five-year farm bill, so instead, we got a partial extension of the 2008 farm bill which will take us through the end of this fiscal year. It averts “a sharp rise in milk prices” that would have occurred in the absence of a new farm bill. Pleeese. Did anyone really think that lawmakers would let milk prices go up? Of course not. But it was a good headline that got everyone’s attention and distracted us from the real farm policy issues.
By kicking the can down the road in this temporary fix, we have rewarded southern cotton growers and big agribusinesses by renewing billions of dollars in direct commodity payments for yet another season for corn, soybeans and cotton. The proposal to drop direct payments in a new five-year farm bill had bipartisan support many months ago since they are politically unpopular and unnecessary in this era of high farm commodity prices. Eliminating direct payments would have saved taxpayers money. The partial extension which prolonged the direct payments was put together behind closed doors by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, according to the Lincoln Journalstar. Environmental Working Group’s Don Carr calculated ethanol’s share of the direct payments for corn used to make ethanol to be around $800 million.
Dairy and livestock producers are two of the farm sectors which are hurting most from the drought and from ethanol-induced high feed prices. They will see no relief. Neither will the land, the soil, or the pheasants, as no advocates for conservation were present in the final hour.
But Iowa Senator Chuck Grassley saw late pork spending as an opportunity for Iowa, by successfully adding to the bill two years of the $1-per-gallon biodiesel blenders tax credit — retroactive for all of 2012 and lasting until the end of 2013. Iowa is the nation’s largest biodiesel producer, with 13 operating refineries. This comes at a time when abundant and low-priced natural gas is being promoted to fuel trucks, calling into question tax-payer support for turning soybeans into biodiesel.
Included in the fiscal cliff legislation is accelerated depreciation of biofuel plant property that goes into service in 2013, and algae is now one of the feedstocks which would qualify a plant to receive the depreciation. A bonus to ethanol interests is the extension of the alternative fuel infrastructure tax credit which will help to promote and subsidize infrastructure necessary for selling E15. In addition, many other existing biofuels and biomass programs were extended through 2013 in this legislation.
Also important to farm owners was maintaining the current estate tax exemption of $5 million per spouse.
What will happen next in farm bill negotiations? Both lawmakers and many of the agricultural producers are weary from a failed process. In the end, we are left with last minute pork barrel deals that are ruling the day.
And the administration is proud to inform us citizens that milk prices will not be changing at our local store. Heroes, to us all.