The last-minute Washington, D.C. deal to veer away from the so-called “fiscal cliff” is being met with a sigh of relief not just from stock brokers and taxpayers, but from farmers. Part of the deal to avoid automatic tax hikes and spending cuts also granted an extension to the expiring U.S. Farm Bill.
“An extension is a good option as opposed to no Farm Bill at all,” said Ballston Supervisor Patti Southworth. “Times change and legislation has to change with them. There are different issues than there was years ago.”
Some referred to the expiration of the Farm Bill as the “dairy cliff,” as it was possible milk prices could double to $7 per gallon or more.
Southworth said farmers in the Town of Ballston, where agriculture remains a driving business force, face enough challenges without having to worry about the Farm Bill.
“Local farmers are in direct competition with large corporate farms coming into the area,” she said. “They buy up products for yogurt and dairy production faster and at rates that the local little guy can’t pay.”
If the Farm Bill were to expire, agricultural rules would revert back to legislation passed in 1949, and government supports would be based on production costs from that time, plus inflation. That could potentially drive the cost of milk up to between $6 and $8 per gallon, versus the current cost of about $3.50.
The price of milk has not only a major effect on families, but on dairy farmers as well. And provisions in the Farm Bill that are now renewed protect them from fluctuations. The extension continues the Milk Income Loss Contract (MILC) provision, which reimburses dairy farmers when the price of milk drops below a certain level.
Dave Wood, who owns Eildon Tweed Farm in Charlton and was the former director of the Cornell Cooperative Extension of Saratoga County, said that an extension is good news and bad news, depending on the size of the farm.
“That would mean a little over a month’s worth of milk for a larger farm,” said Wood, speaking before the last-minute fiscal cliff deal was reached. “The MILC is aimed at smaller farms. This extension would mean smaller farms maintaining pricing for most of the year.”
Wood’s farm has a little over 1,000 cows, which puts him in the larger range.
“It will help a little bit, for sure, but the bigger the farm, the less impact. The smaller the farm, the bigger impact,” said Wood.
Southworth hopes the extension will be a good sign for the farming community in Saratoga County.
“Agriculture is the main industry in the Town of Ballston and Saratoga County in general,” said Southworth. “Agriculture success is vital to the success of this county as a whole.”
Still no forward progress
While the fiscal cliff deal has averted a crisis, what it does not do is tackle agricultural issues that have been on the table for some time. Legislators had been discussing a new round of programs to insert into an upgraded Farm Bill. A new bill is generally passed every five years, and is now several months overdue.
According to the United States Senate Committee on Agriculture, Nutrition and Forestry, a new Farm Bill would end direct payments, strengthen crop insurance and encourage an innovative risk management approach that only provides assistance to farmers when their businesses are threatened by risks outside their control.
Farmers would have access to a single, risk-based coverage program called Ag Risk Coverage that complements crop insurance to protect against both price and yield losses.
Of particular concern to local dairy farmers are two new programs that would replace existing programs. The Dairy Production Market Protection Program is a voluntary program that would protect dairy farm margins equal to the difference between the milk prices and a national feed cost. For small and medium-sized farms, additional margin protection is offered on the first 4 million pounds of milk marketed (the annual production of approximately 200 cows).
Another measure, the Dairy Market Stabilization Program, would encourage producers who participate in the Protection Program to scale down production when the market is oversupplied. But farmers like Wood feel the program could lend a false sense of security and force farmers to gamble with their harvest.
“I just locked in the price myself and I may have done the wrong thing,” said Wood. “Who knows if this is going to be right. I’m a very poor loser, everyone knows that, I feel terrible when I make a decision and it’s wrong, but there’s no way to tell the future.”
Newer farms would also have access to new incentives such as the Beginning Farmer and Rancher Individual Development Accounts Pilot Program, which authorizes matching funds for savings accounts specifically to be used for farming-related expenses for beginning farmers and ranchers.