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Fiscal Cliff Looms, Farm Bill a Worry Too

Fiscal Cliff Looms, Farm Bill a Worry Too
Forget the farm bill, fiscal cliff is the big worry. Yet farm bill questions cause consternation too.

Talk to any farm policy advocate these days and while they want a new farm bill, the greater challenge is the fiscal cliff - that $500 billion package of higher taxes and reduced spending that many predict could hit the U.S. economy hard after Jan. 1. Regardless of what you think, the U.S. stock market is poised for big losses with overnight futures for the Dow Jones Industrial Average off more than 150 points (it was off more than 200 in early trading).

STALLED: Forget the farm bill, it appears Congress and the Administration can't get close enough to avoid the fiscal cliff. Yet farm bill questions are a worry too.

News that House Speaker John Boehner has killed his effort to promote Plan B - the higher-taxes for millionaires plan - is being seen by some as a final nail in the coffin of fiscal cliff negotiations. In a Reuters analysis, the writers say Boehner has few options as he walks away from the Plan B idea - either wash his hands of the whole deal or negotiate directly with Democrats to reach a compromise.

Many say that the Obama Administration must now step up with a plan. Boehner accused the President of being unwilling of battling his own party to get a fair compromise. The Obama Administration wants to see tax rates rise for those with incomes above $250,000. Republicans want to see no tax increases and bigger cuts in entitlement programs.

For farmers this whole mess cuts into any hopes for some kind of new farm bill. While Sen. Debbie Stabenow, D-Mich., has been quoted saying she is still hopeful for a Christmas miracle, that's looking less likely too. Earlier this week Rep. Collin Peterson was quoted by Minnesota Public Radio noting that it will take rising milk prices to get Congress to focus on passage of a new farm bill.

No new farm bill on Jan. 1 means 1949 permanent farm bill provisions take effect and the farm price for milk could more than double. That'll be passed down.

During a media conference Thursday, Secretary of Agriculture Tom Vilsack said that his department is taking a look at all contingencies in the event the permanent farm bill goes into effect. "We are legally obligated to do what we have to…we are looking back in history and there have been limited periods of time [when this has happened]," he says.

Vilsack says the agency is working to understand the process and ways to improve upon it, but he emphasized the legal requirement for USDA to take action swiftly. "We cannot be specific about timing," he notes. "The U.S. government will provided added [dairy] support and will probably purchase a great deal of product because of the richness of the support [in the permanent bill]."

He adds that processors would be hardest hit and would probably move quickly to find alternatives to milk products if the higher prices do take effect.

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