Expiration of the 2014 Farm Bill: Some Potential Implications

Expiration of the 2014 Farm Bill: Some Potential Implications

Updated September 28, 2018
Expiration of the 2014 Farm Bill: Some Potential Implications
The farm bill is an omnibus, multi-year law that governs an
Nutrition Assistance Program (SNAP) has an authorization
array of agricultural and food programs. It provides an
of appropriations ending September 30, it (and other related
opportunity for policymakers to periodically address a
programs in the SNAP account) can continue to operate
broad range of agricultural and food issues. The farm bill
with an appropriation.
has typically undergone reauthorization about every five
years.
Expiration by Calendar Year
Expiration after October 1, at the end of a calendar year,
In the past, farm bills have focused primarily on farm
matters mostly for the farm commodity programs. In the
commodity program support for a handful of staple
event that the current farm law would expire without
commodities—corn, soybeans, wheat, cotton, rice, dairy,
replacement legislation or an extension, the first commodity
and sugar. Farm bills have become increasingly expansive
to be affected would be dairy with a crop year that begins
in their topical scope since 1973, when a nutrition title was
on January 1, 2019.
included. Other prominent additions include conservation,
horticulture, and bioenergy programs.
Consequences for Selected Programs
An appropriations act or a continuing resolution can
The 115th Congress could establish the future direction of
continue some farm bill programs even though a program’s
farm and food policy, because many of the provisions in the
authority has expired. Programs using discretionary
current farm bill (the Agricultural Act of 2014, P.L. 113-79)
funding—and programs using appropriated mandatory
expire in 2018.
funding like those in the SNAP account—can continue to
operate via appropriations action.
Recent farm bills have been subject to various
developments, such as insufficient votes to pass the House
Most farm bill programs with mandatory funding (with the
floor, presidential vetoes, or—as in the case of 2008 and
exception of the largest three: SNAP and programs in the
2014—short-term extensions. The 2002 farm bill was the
SNAP account, farm commodity programs, and crop
most recent to be enacted before the fiscal year expiration
insurance) generally cease new operations when they expire
date for some programs.
(e.g., the Conservation Reserve Program (CRP), and
Timing of Expiration
Market Assistance Program (MAP)). However, existing
contracts under prior-year authority generally could
The timing and consequences of farm bill expiration vary
continue to be paid.
by program across the breadth of the farm bill. There are
two principal expiration dates: September 30 and December
The mandatory farm commodity programs would begin
31. The most recent farm bill—the 2014 farm bill (the
reverting to permanent law beginning with the 2019 crop
Agricultural Act of 2014, P.L. 113-79)—generally expires
year, for which dairy is the first to be affected, beginning on
either at the end of FY2018 (September 30, 2018), or with
January 1, 2019. However, payments for the 2018 crop year
the 2018 crop year that varies by crop. A crop year refers to
would continue to be authorized from the 2014 farm bill,
the year in which a commodity is harvested. A marketing
including final payments for corn and soybeans that would
year follows the crop year and is the 12 months following
be made as late as October 2019 after the 2018 crop’s
harvest during which the crop is typically sold, perhaps
marketing year.
under terms of the relevant government program.
Crop insurance is an example of a permanently authorized
Consequences of Expiration
and funded mandatory program that does not expire.
The possible consequences of expiration range from
minimal disruption (if the program is able to be continued
One mandatory conservation program—the Environmental
via appropriations), ceasing new activity (if its
Quality Incentives Program—was extended through
authorization to use mandatory funding expires), or
FY2019 prior to expiration, so would not expire like other
reverting to permanent laws enacted decades ago.
programs.
Expiration by Fiscal Year
Permanent Law
Expiration of a farm bill on a September 30 fiscal year
“Permanent law” refers to non-expiring farm commodity
matters for programs with fiscal year authorizations. These
programs that are generally from the 1938 and 1949 farm
programs include certain nutrition, conservation, and trade
bills. The temporary suspension of permanent law has been
programs, various agricultural programs excluding the Title
included as a section in all recent farm bills. If the
I commodity programs, along with many authorizations for
suspension of permanent law were to expire at the end of a
discretionary appropriations. Although the Supplemental
crop year, the permanent law provisions would take effect
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Expiration of the 2014 Farm Bill: Some Potential Implications
unless a new farm bill, or an extension of the most recent
expected, and the Agricultural Act of 2014 (2014 farm bill;
act, continues the suspension, or these permanent laws were
P.L. 113-79) was subsequently enacted on February 7,
to be repealed.
2014, to cover the 2014-2018 crop years and other
programs through September 30, 2018.
The commodity support provisions of permanent law are
commonly viewed as being fundamentally different from
Funding for Extensions
current policy—and inconsistent with today’s farming
The funding source for farm bill programs matters since
practices, marketing system, and international trade
some are mandatory and some are discretionary. Mandatory
agreements—as well as potentially costly to the federal
programs usually dominate farm bill policy and the debate
government. To date, Congress has not allowed permanent
over the farm bill budget.
law to take effect. Permanent law provides mandatory
support for basic crops through nonrecourse loans. A
Mandatory programs are authorized—and paid for—in a
nonrecourse loan allows the producer the option of
farm bill with multiyear budget estimates when a law is
forfeiting the crop to the government and keeping the
enacted. Budget enforcement is through “PayGo” budget
principal amount if market prices are below the loan rate.
rules, baseline projections, and scores of the effect of
Permanent law does not authorize more modern support
proposed bills. The baseline is a projection of future federal
approaches such as loan deficiency payments, payments
spending on mandatory programs under current law; it is a
based on prices or revenue that are decoupled from (not tied
benchmark against which proposed changes in law are
to) actual production, or dairy margin protection.
measured (the score of a bill). Discretionary programs are
authorized in the farm bill for their scope, but receive their
Permanent Law and the “Dairy Cliff”
funding in annual appropriations acts (or continuing
resolutions).
Dairy is often discussed extensively when farm bill expiration
arises, not only because it would be the first commodity to
Among the mandatory-funded programs that are usually the
revert to permanent law, but also because it is a good
focus of the farm bill, there are two subcategories that
example of the scale of market effects and costs of
affect congressional action—some have baseline and some
intervention that could result.
do not have baseline. This makes a difference as Congress
Milk is supported in permanent law by compelling USDA to
writes a farm bill, or if Congress considers an extension to
purchase manufactured dairy products (nonfat dry milk,
deal with an expiration.
cheddar cheese, and butter) in sufficient quantities to raise
demand in order to raise the farm price of milk to the desired
The 2008 farm bill is instructive in this regard. The one-
support level. Under permanent law, those mandated
year extension of the 2008 farm bill for 2013 was budget-
purchase prices ($39.08/cwt., based on August 2018 data) are
neutral. Congress was able to extend many of those
more than double current market prices ($15.40/cwt. as the
programs using existing budget resources (baseline) at no
all milk price in July 2018).
additional budgetary cost. However, a subset of farm bill
The high purchase price under permanent law could result in
programs that had been authorized with mandatory funding
the government outbidding commercial markets for a sizeable
did not continue because they did not have a baseline. To
share of output, and that subsequently could raise the retail
have been continued in an extension, those programs would
price of milk. In December 2012, the possibility that milk
have needed budgetary offsets to meet PayGo requirements
prices eventually might double became known as the “dairy
of not adding to the deficit. Providing funding for those
cliff,” aptly named after the concurrent “fiscal cliff.
programs without baseline would have made the extension
more difficult.
In 2013, the While House indicated that the permanent law
for dairy could cost the government $12 billion per year and
result in milk prices doubling for consumers. At that time,
CRS Products
projected outlays for dairy in the 2008 farm bill were about
CRS Report R45341, Expiration of the 2014 Farm Bill
$100 million per year.
CRS In Focus IF10187, Farm Bill Primer: What Is the Farm Bill?

CRS Report R45210, Farm Bills: Major Legislative Actions,
1965-2018
Historical Examples of Expiration
CRS Report R45275, The House and Senate 2018 Farm Bills
As the 2014 farm bill was being developed, there were two
(H.R. 2): A Side-by-Side Comparison with Current Law
expirations; the first was from October 1, 2012 through
CRS In Focus IF10780, Farm Bill Primer: Programs Without
January 1, 2013, and the second dated from October 1,
Baseline Beyond FY2018
2013, through February 6, 2014. Some programs ceased
CRS In Focus IF10783, Farm Bill Primer: Budget Issues
new operations, while others were able to continue.
However, neither expiration lasted long enough for the farm
commodity programs to revert to a “permanent law” that

would have raised support prices and increased federal
outlays. On the first occasion, the 2008 farm bill was
Jim Monke, Specialist in Agricultural Policy
extended for one year; all provisions that were in effect on
IF10989
September 30, 2012, were extended through FY2013 or for
the 2013 crop year as applicable. On the second occasion,
no extension was enacted, but a conference agreement was
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Expiration of the 2014 Farm Bill: Some Potential Implications

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https://crsreports.congress.gov | IF10989 · VERSION 4 · NEW