LIME SPRINGS, Iowa (DTN) — On Tuesday, Agriculture Secretary Tom Vilsack took a stand against congressional proposals to reduce the USDA‘s budget. He predicted that a failure to extend the current Farm Bill would inevitably lead to adverse outcomes for farmers.

Vilsack, along with the USDA Rural Development staff, attended a gathering in the rural northeastern town of Lime Springs, Iowa. Here, he applauded an $8.8 million grant directed towards expansion strategies for Upper Iowa Beef, a local packing plant with a daily capacity of 400 heads.

While discussing farm income and strategies to support small to medium-scale farmers, Vilsack interacted with local community leaders. Many community members rely heavily on the USDA Rural Development funding for services such as wastewater treatment, electricity, broadband, housing, and childcare, among others.

Jason Passmore, the Howard County economic development director, explicitly stated the community-wide dependency on these USDA programs. According to him, rural America struggles significantly without the support that USDA funds provide, particularly in key areas such as workforce and housing.

The future of many USDA programs is now uncertain due to the stagnation of the fiscal year 2024 USDA appropriations bill. Congress failed to pass the bill in September, shortly before Kevin McCarthy was removed from his role as the U.S. House speaker.

While addressing Lime Springs community center attendees, Vilsack highlighted the tangible impact of the budget cuts. He relayed his concerns about the delays in appointing a new House Speaker, who would eventually steer and stabilize the chamber, pertinent for passing the USDA/FDA funding bill, which has already faced multiple rejections due to its significant cutbacks.

Currently, the USDA is reliant on a short-term funding extension passed by Congress to keep government operations functioning until mid-November. Responding to inquiries about his concerns, Secretary Vilsack cited both the looming funding deadline and the pressing need for Congress to contemplate an extension on the Farm Bill programs. He warned of potential issues if Congress doesn’t act on the Farm Bill by the end of the year, leading to the possible discontinuation of programs like the Dairy Margin Protection Program.

Should there be no extension to the Farm Bill, farm policy would default to “permanent law” from the mid-twentieth century. This could create a so-called dairy cliff, causing government milk prices to skyrocket, inflating the cost of dairy products for taxpayers and creating substantial disorder, as Vilsack cautioned.

He commented on a significant obstacle obstructing the new Farm Bill – reference prices for Agricultural Risk Coverage and Price Loss Coverage (ARC and PLC) programs. Even a modest 10% overall increase in reference prices for commodities could cost around $20 billion over a decade. Vilsack suggested creatively utilizing the Commodity Credit Corporation (CCC) as a potential solution.

However, Vilsack‘s capability to leverage CCC funds could be inhibited by a provision in the House appropriations bill for USDA, which restricts the use of CCC funds to emergencies only.

The secretary emphasized the importance of reserving $19.5 billion from the Inflation Reduction Act, which is essential for USDA‘s conservation programs to reduce carbon emissions in agriculture.

Reflecting on the country’s loss of 437,000 farmers since 1981, Vilsack called for greater focus on rural economic development efforts. He continues to champion these initiatives as alternative revenue sources for farmers alongside programs like ARC and PLC. “Much of it hinges on the preservation of what’s in the Farm Bill, the protection of the measures in the Inflation Reduction Act, and also ensuring the Agriculture Secretary‘s continued flexibility with the Commodity Credit Corporation,” Vilsack remarked.