The 2018 farm bill expired at midnight on Sept. 30 with no replacement in sight. So where does that leave Sunbelt farmers who were hoping for new price support legislation based on current market realities?

For years, the conventional wisdom has been that allowing a farm bill to expire without an extension of the current law would cause farm programs to revert to the 1938 or 1949 farm bills or “permanent law.” That isn’t happening yet.

“I think you’ll hear about that after the end of December,” said Dr. Joe Outlaw, co-director of the Agricultural and Food Policy Institute at Texas A&M University. “That’s when all the talk about imposing parity prices and allotments (which would be authorized under the 1938 and 1949 farm laws) comes into effect.”

Outlaw said that’s because the farm programs for the major row crops – cotton, corn, soybeans, rice, wheat and other oilseeds are on a crop year basis. Producers should receive their 2023 Agricultural Risk or Price Loss Coverage payments, which are based on signups for the 2022 crop year, this fall.

“There’s something in the dairy program and some of our export assistance and conservation programs may have expired,” he said. “But Dec. 31 is the time when they must have an extension of the 2018 farm bill or we will revert to the 1938 and 1949 farm bills for the main commodity title.”

No clear path

How Congress will focus on passing new farm legislation when the House of Representatives does not have a speaker and the Nov. 17 deadline to pass appropriations bills to fund the government is fast approaching is not clear.

“All bets are off,” said Outlaw, who has been advising Congress on the impact of farm programs for years. “I think anyone who tells you anything right now is just guessing. I thought they might be able to get a new farm bill done early next year. Now, I’m not so sure.”

Farm organizations have been asking the House and Senate Agriculture Committees to increase the reference prices used to calculate payments for the Agricultural Risk and Price Loss Coverage, citing changes in farm economics that have made the outlook bleak for more producers.  

USDA’s most recent forecast projects U.S. net farm income to plummet by $42 billion to $141 billion in 2023 due to lower commodity prices and higher costs due to supply chain problems for farm inputs.

“The current reference prices were set using data that was compiled more than 10 years ago,” said Outlaw. “But to my knowledge they didn’t come up with any new money for increasing reference prices. They were having to use unspent funds and reallocate them. They never got any new funding, and I don’t think that anything that’s happened recently is going to change that.”

Extension possible

Outlaw thinks an extension of the 2018 farm bill is possible. “The question is for how long. I was thinking they might get a new bill passed before the primaries began happening next March. Now I’m less optimistic. I don’t know how they can do it and make those people happy that want to cut everything.”

Conventional wisdom also says you should never try to pass a farm bill in an election year. That’s not only because of the distractions of campaigning for House and open Senate seats but also because of the potential fallout from voting on legislation.

“It gives any side of an issue something to hold against their opponent,” he said. “If they vote for the farm bill, then whoever’s running against them says ‘Look what they voted for – all this unnecessary blah, blah, blah.’ So most people won’t want to vote on major legislation next year.”

So what is the impact of the 2018 farm bill’s expiration? The Congressional Research Service compiled a summary of “the timing and consequences” based on two principal expiration dates: Sept. 30, 2023, and Dec. 31, 2023:

Nonexpiring provisions

For the farm commodity programs that face consequences after Jan. 1, 2024, permanent law refers to a set of nonexpiring provisions from the 1938 and 1949 farm bills that remain in statute but are temporarily suspended by each recent farm bill.

“Permanent law does not recognize relationships in productivity gains and technological advances in agriculture,” the CRS said. “It is inconsistent with modern government policies that reduce the effects of market intervention and that meet U.S. obligations in the World Trade Organization. Permanent law would support dairy, wheat, rice, cotton, and corn but would not support soybeans, peanuts, and sugar, among other commodities.

“If the permanent law suspension were to expire, the U.S. Department of Agriculture would be required to implement permanent law, which is likely more expensive to the government and consumers than the current farm bill. Under permanent law, USDA would be required to support eligible commodities at levels that exceed 2023 market prices.”