How the Government Shutdown Will Affect Your Grocery Bill - Meet the Farm Bill

One year ago I wrote a blog mentioning The Farm Bill and the fact that it was up for renewal in September 2012 to become effective Jan. 1, 2013. I quoted a friend who works for the Department of Agriculture that farmers, generally, were concerned that it wouldn't pass in time for them to get their subsidies. I was concerned that the subsequent removal of price ceilings would cause food prices, especially dairy to skyrocket. Well, it did expire then, but was given an extension in December until September 2013. Now it's expired again and must be addressed before the beginning of 2014, but there are so many issues currently connected with it and Congress is so preoccupied, that it will probably be postponed again. Then, at best it will be under discussion for many months. It may get another extension or it could remain expired until a new bill is drafted. In good times, without other grave matters overshadowing it, this bill normally takes 3 years to draw up. It's already way overdue.

So what is The Farm Bill and why is it important? To summarize, F.D.R. created its forerunner in 1933 as a means of manipulating prices during the depression to help the economy, to subsidize farmers and encourage them, to begin land conservation and to provide storage of excess harvests, which comes under the heading of "Nutrition". It picked up an added importance after World War II. There was an old song from W.W.I that asked:"How you gonna keep 'em down on the farm after they've seen Paree?" In the 1940's, the G.I. Bill offered the opportunity to get college, and other types of educations and choose careers. The introduction of housing developments and expansion of suburbia made it profitable for farmers to sell their land. The subsidies provided by The Farm Bill counteracted the trend a bit by presenting an inducement for farmers to keep their farms and for young men to return to them.

The bill got its present name in 1965 and was reviewed and ratified every 5 years, but it typically began its revision process after 2 years. Compared to most Congressional issues, it had a smooth ride until 2008, but along the way its nutritional provision allowed two of its appendages to become big controversial issues; School Lunches and Food Stamps.

From then on, the fight became, as many do, all about the money; how to divide The Farm Bill budget. After the economy crashed, the fight became more intense because it was all about splitting the new reduced Farm Bill budget. The Farm Bill itself had smoothly rolled along for many years, but its two enlarged appendages, have halted its movement and allowed all sorts of special interest debris to attach itself to the three parts, giving them the appearance of huge mountains to climb. In fact they are difficult issues to resolve independently and much larger as a combined group. Frankly, with Congress so concerned with other matters, I don't see them resolving this problem by January 2014. Neither do any of the expert analysts.

So how does the lack of a Farm Bill affect you and me? Well, there's a lot of speculation, and it gets complicated, as most government issues do. Without the bill, price ceilings disappear. The farmers face cost of living expenses like everyone else, and without the subsidy they have to make ends meet. The first thing to reflect this will be milk. Prices may double in a few weeks. Other dairy products and items containing dairy products will follow suit within three or four months.

Another problem is that the rural energy program is running out of funds. This means that farmers will have to pay more to run their equipment, even the sprinkler systems. The prices of farm products will reflect this as well. Moreover, conservation efforts will be curtailed. Payments to protect wetlands and other fragile ecological areas from cultivation will stop. So will funding for agricultural research.

One big area to be affected is our trade agreements with other countries, especially those in Central and South America. We import a large percent of our produce, both fresh and frozen, from that area and the contracts are based on our prices. They change drastically, and the contracts will change. One such contract which could have a major impact has nothing to do with produce but still comes under the Farm Bill, is our trade pact with Brazil. We pay them $100 million-yes million-per year not to tax our imports. That money comes out of the Farm Bill. The bill goes, the contract goes and our export business with Brazil may well go too. So business other than farms could be hurt. A former neighbor of mine manufactures cotton sweaters, and does a large business with Brazil. I imagine he's not too happy. Remember the days when other countries wanted our goods and import taxes didn't impact?

How much SNAP, the Supplemental Nutritional Assistance Program which covers food stamps will be affected is still to be seen. The employees aren't subject to the shut-down, so there's no immediate effect. It goes without saying, however, that if the price of food goes up, the stamps won't cover as much There is sure to be a change in the long run, though because food stamps are a big bone of contention in getting a new bill passed. The Senate actually passed a Farm Bill before the deadline, but the House rejected it because it didn't cut food stamp funding enough to please them. Some programs in SNAP, like Meals on Wheels have already suffered the crunch.