A nine-month extension of the 2008 farm bill – tied to legislation allowing Congress to step away from the “fiscal cliff” – was secured following a late-hour House vote on Jan. 1. After the withering, partisan lead-up to the vote, few were popping champagne corks in the aftermath.

In the end, House GOP leaders allowed an up-or-down vote on the legislation passed earlier by the Senate, 89-8. The 257-167 House vote ended up with a majority of Republicans (151) voting nay along with 16 Democrats.

The legislation is expected to raise taxes by some $620 billion by increasing tax rates on incomes over $400,000 for individuals and $450,000 for couples. It will also provide a permanent 40 percent tax rate on estates worth more than $5 million ($10 million per couple).

“While much work remains on addressing the spending side of the ledger, the fiscal cliff package that was just approved injected a good dose of certainty into our nation’s tax policy,” said Bob Stallman, president of the American Farm Bureau Federation. “That is a major achievement. The measure restored the $5 million exemption level for the estate tax, which was in danger of falling to just $1 million. On the minus side, the top estate tax rate increased from 35 percent to 40 percent. Permanent capital gains tax provisions that retain lower rates was a positive point, as was the inclusion of enhanced expensing provisions for businesses.”

Even though a five-year farm bill wasn’t in the cards, farmers will be interested that the extension will maintain direct payments, which would have been otherwise axed.

“The provision extending the 2008 farm bill through the 2013 crop year is vitally important to rural America and to the nation's farmers and ranchers, including U.S. rice producers,” said the USA Rice Federation in a statement. “In particular, in the absence of a new farm bill, the continuation of the direct payment program and the market access and promotion programs are of critical importance to the rice industry.”

The legislation also alleviates concerns that dairy product prices will jump with a reversion to 1949 law. Many Capitol Hill observers claim lawmaker worries over a doubling in milk prices helped push Congress to act.

In mid-December, Jeffery Hall, associate director of national affairs for the Arkansas Farm Bureau, said, “No lawmaker wants to face constituents if dairy reverts to 1949 permanent law and the price of milk suddenly spikes to over $8 per gallon. That would cause major problems in a number of areas. And that’s why we adamantly oppose the elimination of permanent law. The fear of that is the only hook that we in agriculture have right now to get something done.”

It is no secret that dairy producers have been hurt by rising input costs and low milk prices in recent years.

Having backed the Dairy Security Act, hammered out over the last several years, as a solution to the problems, Jerry Kozak, President and CEO of the National Milk Producers Federation, lambasted the extension. “These stop-gap efforts don’t even qualify as kicking the can down the road. It’s little more than a New Year’s Day, hair-of-the-dog stab at temporarily putting off decisions that should have been made in 2012 about how to move farm policy forward, not offer more of the same. … Despite the progress made in 2012 on the farm bill, we’re starting 2013 on a bad note. We oppose any farm bill extension of any duration that does not contain the Dairy Security Act, and resolve to work this year on achieving that as a long-term goal.”

Peterson anger

Minnesota Rep. Collin Peterson, ranking member of the House Agriculture Committee, is clearly angry with how the White House negotiated over a new five-year farm bill. Peterson was also instrumental in putting together the dairy package favored by the National Milk Producers Federation. “Upset is an understatement,” Peterson said in a POLITICO report. “I’m not going to talk with those guys. I’m done with them for the next four years. They are on their own. They don’t give a (expletive) about me anyway.”

Renewable energy advocates were happier with the legislation as it reinstates the biodiesel tax incentive for 2012 and 2013.

"We're pleased that Congress has finally approved an extension so that we can get production back on track," said Anne Steckel, vice president of federal affairs at the National Biodiesel Board (NBB). "This is not an abstract issue. In the coming months, because of this decision, we'll begin to see real economic impacts with companies expanding production and hiring new employees."

According to the NBB, the $1-per-gallon biodiesel tax incentive was first implemented in 2005. Congress has allowed it to lapse twice, in 2010 and again in 2012.

Meanwhile, commodity and farm groups continue to urge Congress to pass a new five-year farm bill.

Erik Younggren, National Association of Wheat Growers President, is pleased farmers now, “know the parameters of tax policy and the farm safety net for spring planting decisions and allow continued operations of critical foreign market development programs.” However, he continued, “It is of the utmost urgency to our farmer-members that members of the 113th Congress reauthorize a new farm bill expeditiously. We call on policymakers to come to the table, compromise and send a five-year farm bill to the President for signature this year.”

National Corn Growers Association President Pam Johnson called for an end to “petty partisanship” and lamented that, “Once again Congress’ failure to act pushes agriculture aside hampering farmers’ ability to make sound business decisions for the next five years. The (NCGA) is tired of the endless excuses and lack of accountability. The system is clearly broken.”

Danny Murphy, American Soybean Association (ASA) President and soybean farmer from Canton, Miss., said the lack of a new farm bill following several years of work was disappointing. Even so, the extension provides “important foreign market development, disaster assistance, and farm safety net programs to continue.

“ASA is also pleased that the larger package passed by both the House and the Senate to avert the ‘fiscal cliff’, of which the extension was a part, included a meaningful solution to the estate tax challenges faced by farm families and many other small businesses.”

The National Sustainable Agriculture Coalition was much less forgiving with the extension as “many smaller, targeted programs to fund farm and food system reform and rural jobs … were left out completely. Also left out of the final deal is any workable dairy policy for the next year and any disaster aid for livestock and fruit producers. The deal also has the effect of keeping farmers from being able to improve soil and water conservation through enrollment in the Conservation Stewardship Program at the present time.

“We are extremely disappointed in the Republican leadership for proposing this deal and in the White House for accepting it.”

Mining the same vein, Roger Johnson, president of National Farmers Union, pointed out the extension “does not provide mandatory funding for the energy title, specialty crops and organic provisions, and new important programs for beginning farmers and ranchers.

“Farmers, ranchers, rural communities and all Americans deserve better and would have been better served with a new five-year farm bill. It is truly a shame that the bipartisan work of both the Senate and House Agriculture Committees has been summarily and entirely discarded.”