Minn. farmers get lost in budget standoff; crop policies revert to '49

  • Article by: KEVIN DIAZ , Star Tribune
  • Updated: October 7, 2013 - 9:32 AM

Crop policies could revert to 1949 law, meaning price hikes for shoppers.

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Eden Valley farmer Tom Haag emptied corn into a holding wagon used to shuttle the grain to a nearby semi-trailer for transport back to the farmstead and a storage container.

Photo: Jim Gehrz, Star Tribune

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When the clock struck midnight on Tuesday, ushering in a massive federal government shutdown, the calendar also flipped back to 1949 for Minnesota farmers like Kevin Paap.

Overshadowed by the politics of the shutdown, the deadline for passing a new farm bill also brought with it the expiration of many federal farm programs, leaving in their place something called “permanent law,” or the status quo of 1949.

That was the year Frank Sinatra and Doris Day were singing “Let’s Take an Old Fashioned Walk,” and former Minneapolis Mayor Hubert Humphrey was taking a seat in the U.S. Senate, where he would go on to join the Agriculture Committee.

What farm policies developed in the 1930s and ’40s mean in the context of 21st century mechanized agriculture is anybody’s guess. “Nobody really knows,” said Humphrey protégé Amy Klobuchar, one of the Senate negotiators in the stalled farm bill talks. “There are so many new programs that have been developed since that time.”

The post-World War II period was a time of crop allotments and marketing quotas set by farmers who got to vote on them. It was a system with little relevance for modern farmers, few of whom even know how they worked.

Paap, president of the Minnesota Farm Bureau Federation, knows this much: “In the 1940s, everybody had some cows. I’m sure we, at our farm, had some wheat ‘allotments.’ But we probably haven’t grown wheat in almost 20 years. So it’s much different agriculture, just like it was a much different world in 1949.”

If there’s one upside to the bureaucratic chaos amid programs that are supposed to smooth out farm economics and protect producers from natural and financial disasters, it’s that the specter of 1949 law is supposed to push Congress to act. So far, it hasn’t.

“The theory is that this would get people to be sensible,” said Minnesota Democrat Collin Peterson, one of the most influential leaders on the House Agriculture Committee. “I think everybody is seeing there’s nothing you can do to make some of these people sensible.”

Food costs could rise

The Agricultural Act of 1949 is called permanent law because that was the last time Congress passed a farm bill with non-expiring provisions. Modern farm bills essentially are multiyear extensions, usually five years in duration. The 2008 farm bill expired a year ago but was extended until Sept. 30.

Now, with Congress still at loggerheads over Republican efforts to cut $40 billion from the food stamp program — the biggest and most controversial component of any farm bill — it’s back to 1949.

Paap said it’s bad enough for farmers, who have little idea what kinds of price supports, conservation and nutrition programs a deadlocked Congress might produce by next spring’s planting season. “We’re already making plans for next year’s crop,” he said. “We’re making those decisions now.”

Come January, consumers could feel the bite. Some agricultural economists are predicting a doubling of dairy prices at the grocery store, owing in part to the mothballed provisions of 1949 law.

‘It would cost a fortune’

That’s because the small-scale farms of 1949 received much higher subsidy levels — adjusted for inflation — than today’s big farming operations, which benefit from 60 years of productivity gains and technological advances. Permanent law guaranteed farmers “parity prices” for crops based on their production costs. The ratios were based on historic benchmarks set during the progressive movement that swept rural America in the early 1900s.

“If the whole thing got implemented today, it would be unreal what it would cost,” Peterson said, laughing. “It would cost a fortune.”

There are no recent budget estimates of the potential cost to taxpayers, but the Congressional Research Service offered one illustration in 2012, when the market price for wheat was $6.37 a bushel: Under the $2.94 support level of the 2008 farm bill, no government subsidy was needed. Under permanent law, the floor price would have been $13.58, requiring a substantial federal subsidy.

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