US Government Shuts Down, Leaving Farm Bill Unfinished

Lawmakers in the US were unable to reach a final budget compromise in the early hours of 1 October, triggering a shutdown of the federal government. Given the budget impasse, Congress was also unable to reach agreement on a 2013 Farm Bill, letting last year’s extension to the 2008 legislation expire.

Farm policy has taken a back seat in recent weeks to a confrontation along party lines regarding the Obama Administration’s reforms to US healthcare. Although procedural steps to move the omnibus legislation covering American agriculture are being assiduously addressed by the leadership of the agriculture committees, substantive compromises have remained subject to broader debates on the budget and the healthcare law.

Nutrition compromise efforts on hold

Before the August recess, the two chambers of Congress had differed on the nutrition component of the Farm Bill, so much so that they could not be reconciled. After legislators returned to Washington in September, compromises were being hashed out as some members of the House of Representatives put forward a bill to re-link the commodity and nutrition titles.

Though the measure did not pass, pundits say the effort indicated a willingness among sharply-divided lawmakers to eke out a compromise. Historically, rural farm interests and those concerned with urban nutrition have worked together to ensure the other a share of taxpayer funds.

Conservative lawmakers in the House, who had wanted to see deeper cuts in spending on the Supplemental Nutrition Assistance Program (SNAP) - more commonly known as food stamps - passed only the commodity portion of the Farm Bill earlier this summer. Democrats in the chamber, opposed to the cuts in SNAP, did not vote in favour of the Republican proposal.

A separate nutrition component of the Farm Bill was finally passed by the House late last month on a party line vote. The deep cuts in the House nutrition bill have been a source of contention between the two parties as they seek a compromise on farm policy. The Senate, on the other hand, has twice passed both the nutrition and commodity elements of its bill in as many years.

A final Farm Bill will require a procedural effort to reconcile the two bills. On Tuesday, members of Congress agreed on a group of senators to “conference” the two differing bills together, only for the government shutdown to put the process on hold.

Given the absence of a final bill, the possibility of an extension is again being discussed. Programmes such as food stamps, crop insurance, and existing subsidy programmes are likely to continue. Much like last year’s farm bill extension debate, analysts predict that Congress could be spurred to action if Depression-era permanent legislation goes into effect at the end of the year.

Industry groups, analysts: Farm Bill could risk trade dispute

Prominent industry groups are worried that some programmes in the Farm Bill may spur trading partners to dispute whether or not the US is complying with international trade obligations. The National Foreign Trade Council, National Association of Manufacturers and US Chamber of Commerce recently released a letter that called on Congress to address the possible trade rule violations that could be caused by two programmes in the provisional Farm Bill commodity title passed earlier this year.

The letter, drawing on analysis prepared by the law firm White & Case, warns that the Senate’s Adverse Market Payments programme and the House Price Loss Coverage programme would could “run the substantial risk of violating” WTO obligations for reasons similar to why the US was found to be at fault in the US-Brazil dispute over cotton support.

Similarly, analysis released by the University of Missouri also argues that the shift from WTO “green box” compatible, or minimally trade distorting, direct payments to crop insurance programmes would make it more likely that this “might exceed [Washington's] commitments” to limit WTO “amber box” spending, which is viewed as trade distorting. Proposed changes in dairy support may prevent that from happening, however.