As we approach the end of the U.S. government’s (USG) fiscal year, the probability of a government shutdown seems imminent. The USG has until tomorrow (September 30th) to reconcile differences in government spending before they ultimately shut down for an unknown period (Cassella, 2023). The issues arise in Congress where disagreements on government spending based on ideological lines have paralyzed the passing of funding bills needed to keep the government running beyond September 30, 2023. To avoid a government shutdown, Congress has several tools at its disposal, ranging from passing a short-term Continuing Resolution to passing all 12 appropriations bills (e.g., funding allocations for government agencies). Keep in mind that President Biden must also sign whatever Congress passes by the end of day on September 30th (Committee for a Responsible Federal Budget, 2023). Otherwise, a shutdown is nearly impossible to avoid. Incidentally, the 2018 Farm Bill also expires tomorrow. While we touch on that below, farm bill reauthorization is currently taking a backseat to efforts to fund the government.
What does a shutdown mean for farmers?
Besides a shutdown impacting everything from social security, national parks, and air travel, the agricultural sector may also be heavily affected. Namely, the Farm Service Agency (FSA), Natural Resources Conservation Service (NRCS) and Rural Development offices are expected to close (Bickelhaupt, 2023). For a producer who participates in government programs, these agencies likely will not hold sign-ups, accept acreage reports, or issue participation payments during this time. While the length of a government shutdown would ultimately determine the overall impact to the farm sector, folks expecting payments for participation and/or wanting to enroll in a new program will likely feel the impacts shortly after the shutdown.
What about farm bill expiration?
Importantly, the prospect of a government shutdown and the expiration of the farm bill are two separate issues – they just happen to be occurring at the same time. However, the difficulty incurred in avoiding a government shutdown further highlights the challenges Congress faces in reauthorizing the farm bill. For producers, the impact of an expiring farm bill would likely not be felt until early 2024, because the current programs like Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) run through the end of this calendar year (Zimmerman, 2023). If farm bill expiration were to stretch into the New Year, USDA would need to pay out commodity price supports as laid out in the 1938 and 1949 Farm Bills; meaning, the USDA would be forced to purchase commodities such as milk, wheat, and cotton, at “parity prices” that are on par (in terms of purchasing power) with levels in the early 1900s (e.g., $50.70/hundredweight for milk based on May 2023 data). These price supports could mean that the U.S. government would “outbid” commercial markets and ultimately raise the price of retail commodities (Congressional Research Service, 2023). With respect to farm bill expiration alone, government programs such as SNAP (Supplemental Nutrition Assistance Program) and crop insurance would likely not feel the same impacts. SNAP is an appropriated entitlement, and Congress likely would continue funding SNAP via the appropriations process (although we discussed above how that process has unfolded this year) and thus could continue most programs. Crop insurance is permanently authorized and funded by the Federal Crop Insurance Act that does not expire with the 2018 Farm Bill (Congressional Research Service, 2023).
Bickelhaupt, H. (2023, September 18). A Government Shutdown Could Impact Farmers. Retrieved September 20, 2023, from https://ilcorn.org/news-and-media/current-news/article/2023/09/a-government-shutdown-could-impact-farmers.
Cassella, M. (2023, September 19). How a Government Shutdown Could Leave the Fed Flying Blind. Retrieved September 20, 2023, from https://www.barrons.com/articles/government-shutdown-fed-inflation-data-48058234?mod=livecoverage_web.
Committee for a Responsible Federal Budget. (2023, September 5). Government Shutdown Q&A. Retrieved September 21, 2023, from https://www.crfb.org/papers/government-shutdowns-qa-everything-you-should-know#whatservicesaffected.
Congressional Research Service (2023, August 21). Expiration of the Farm Bill. Retrieved September 20, 2023, from https://crsreports.congress.gov/product/pdf/R/R47659.
Zimmerman, S. (2023, September 12). How the Looming Government Shutdown is Complicating the Farm Bill. Retrieved September 21, 2023, from https://www.agriculturedive.com/news/farm-bill-budget-government-shutdown-food-prices/693425/.