This is a two part blog post. Part One covers the background of the legislative process and Part Two covers the specifics about the scenarios for farm bill programs if the 2018 Farm Bill were to simply expire.
The Conference Committee convenes next week on September 4, 2018. Conferees from both Houses will work to reconcile their versions of the 2018 Farm Bill. But what is motivating them to reach a timely deal?
The 2014 Farm Bill “expires” on September 30, 2018. So what does “expiring” mean, exactly? Could Congress actually let the farm bill expire? What would happen?
The Consequences of Farm Bill Expiration
If the 2014 Farm Bill were to expire with no reauthorization or extension, not all farm bill programs would be affected equally. Each program would face one of three different scenarios. Some programs would simply lose the funding to operate and effectively shut down. A few key programs would continue more or less as they do now. Others would revert back to outdated permanent law from 1938 and 1949 Farm Bills.
1. Many farm bill programs would cease to operate.
For some farm bill programs, if Congress failed to take any action on the farm bill by the September deadline, the programs would cease to operate.
Programs with mandatory funding would stop operating if the farm bill expires. Funding for these program is written directly into the farm bill, generally on a year-by-year basis for all years of that farm bill. Most programs with mandatory funding in the 2014 Farm Bill are funded through 2018. Without a new farm bill or extension to the current farm bill, no funding would be available for these programs at all. Many core farm bill programs would cease to operate in this manner. For example, the Conservation Reserve Program has mandatory funding through FY2018. Without a new or extended farm bill, there would be no more funding for the program.
Programs with discretionary funding may lose their authorizing language. Without their authorizing language, the USDA could change components of the programs. USDA is not likely to do this, but the agency would only be bound by the appropriations language and not the provisions in the expired farm bill. Ultimately, these programs would continue to operate.
2. A few key programs would continue unchanged.
The two programs that make up nearly 90 percent of all farm bill spending would remain in place even if the 2014 Farm Bill expired without extension or reauthorization. This is because those programs are funded through appropriations and have permanent authorization (authorization not subject to the sunset provisions). This means that these programs would still have both the authorization and funding, so they would keep going.
First, the Supplemental Nutrition Assistance Program (SNAP) is authorized through the farm bill but receives discretionary funding through Congress’ annual appropriations process. Because it receives appropriations outside of the farm bill process, it does not need to rely on the farm bill for continued operation. Second, federal crop insurance is permanently authorized by the Federal Crop Insurance Act. This means that it would continue unchanged if the current farm bill were to expire.
Supplemental Nutrition Assistance Program (SNAP)
SNAP currently serves about 40 million people per month. SNAP comprises the bulk of the “Nutrition Title” of recent farm bills, in terms of funding and language. Traditionally, SNAP is updated and reauthorized as part of the farm bill.
SNAP’s authorization is part of permanent law under the Food and Nutrition Act of 2008. Therefore, even if the 2014 Farm Bill expires, the modern SNAP program will be unaffected. With regard to funding SNAP, that is contingent on the appropriations process. Currently, SNAP is funded through the end of FY 2018 (aka until September 30, 2018) and assuming there is a new FY 2019 budget, the program will continue.
Many Republicans in Congress, following the direction of the Heritage Foundation and the President, are demanding changes in SNAP’s funding and implementation; specifically, the partisan House bill restructures work requirements for able-bodied recipients without dependants and alters SNAP’s funding structure. Both SNAP changes are contrary to FBLE recommendations. These highly controversial provisions are currently on the table at Conference. However, if Congress is unsuccessful at Conference or the President vetoes, the whole Farm Bill drafting process would start over with a Congress that might be more friendly to anti-hunger and left-leaning organizations.
Because SNAP carries on in its current form even if there is no new farm bill, some groups that want to protect and promote SNAP see the expiration of the 2014 Farm Bill without reauthorization as preferable to the passage of a new farm bill that, like the House version, makes major cuts to SNAP.
The Crop Insurance Title (Title 11) of the farm bill provides a “safety net” of risk management options that protect farmers and their crops in the case of disaster. The Federal Crop Insurance Act of 1980 permanently authorized Federal crop insurance, meaning that federal crop insurance will continue to exist even if the 2014 Farm Bill expires without reauthorization or extension. However, the 2014 Farm Bill enhanced coverage. This means that the bulk of the crop insurance program would stay intact, but losses not covered under the original 1980 Crop Insurance Act would again not be covered. The most important change for farmers would be the discontinuation of the Shallow Loss Program, which was first included in the 2014 Farm Bill.
Because the USDA’s Risk Management Agency, who manages crop insurance, is funded through the annual appropriations process, the crop insurance program would continue to operate. Assuming there is a new FY 2019 Budget, crop insurance will be funded.
3. A few programs would revert back to being governed by permanent law from a different era.
Some programs, instead of expiring completely without a new or extended farm bill, would revert back to being governed by the original permanent law that created them. Most programs created with permanent law in the Agricultural Adjustment Act of 1938 and the Agriculture Act of 1949 have been changed and modernized through subsequent farm bills. But, these changes only last as long as each farm bill, and without a new or extended farm bill, the programs would revert to being governed by old permanent law that might no longer makes sense in the modern world.
If the 2014 Farm Bill were to expire with no reauthorization or extension, reversion would present an interesting and tricky problem. The permanent versions of these programs in the 1938 and 1949 laws worked at the time, but today, they are extremely outdated. Reversion would likely be extremely expensive for the government, taxpayers, and consumers because older laws are not equipped to handle current markets. Furthermore, USDA would likely have to develop a process to implement the older permanent law. This would take time, which would further affect the markets, production, and costs to both consumers and producers; while also resulting in extreme uncertainty for all stakeholders.
If the Farm Bill title that covers Farm Commodity Programs were to expire in September without reauthorization or extension, the only commodity programs that would continue to exist would be those in permanent law from the 1938 and 1949 Farm Bills – outdated programs no longer able support farmers in modern markets. Furthermore, many of the commodities American farmers grow today, such as soybeans, oilseeds, peanuts, and wool, would lose support entirely because they weren’t part of the 1938 and 1949 commodities programs.
One especially dramatic example of the problems of reversion is the Dairy Product Price Support Program. Farm Bills over the past decades have changed the program significantly, but if no new farm bill is passed, the program would revert to its original version. According to a 2014 calculation, reversion to permanent law in this program would require USDA to buy manufactured dairy products at about four times the then-current price, resulting in tremendous increases in government spending on the program as well as consumer dairy prices. In addition, because of modern international trade, with its incredible speed and refrigeration capacity, the United States government would eventually buy the dairy products of potentially all global producers.
This outrageous dairy program is the main driver that forces Congress to either extend the 2014 Farm Bill or pass a new one.
Mandatory Funding: funding for a program that is written directly into the authorizing language of the statute (in this case, the Farm Bill)
Discretionary Funding: funding that is allocated to a program through the yearly appropriations process and is subject to change each year
No Funding: No funding does not mean that the treasury is dry, but instead that the agency loses the authority to go into debt and make obligate money to other parties
Appropriations: the annual process through which government programs are funding. This is also called the budget and when the government fails to complete the appropriations process there is a government “shut-down”
Sunset Provision: an end date to a bill, at which point that piece of legislation is no longer valid law
Permanent Law: a piece of legislation that does not include a sunset provision and is valid law unless altered or repealed by a subsequent piece of legislation