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USDA Preparing For New Farm Law as Price Threat Looms

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Jan. 13 (Bloomberg) -- The U.S. Department of Agriculture is preparing to implement an agriculture law not yet passed in Congress and isn’t planning to adjust for rules that may double milk prices in the absence of a law, Secretary Tom Vilsack said.

Without new farm legislation in place, U.S. agricultural policy reverts to a so-called permanent 1949 law, which would force the government to stockpile milk until prices are about double the current for dairy futures traded in Chicago. Vilsack said such a scenario is unlikely and that USDA resources are better spent preparing to implement new farm programs.

“Our focus is not on the permanent law, and it will not be on the permanent law, until it appears obvious to me that we’re not going to have a farm bill,” he told reporters today at an American Farm Bureau Federation conference in San Antonio. “I am more optimistic that we are going to have a farm bill.”

Lawmakers have been debating the bill for more than two years. The measure governs farm subsidies, which encourage the planting of soybeans, cotton and other crops that reduce the cost of materials for commodity processors including Bunge Ltd.

The bill also subsidizes crop insurers such as Ace Ltd. and funds consumer purchases at Kroger Co. and other grocers through food stamps, the biggest USDA expense.

Lawmakers aiming to pass a bill this month are deadlocked over the structure of new dairy programs, potential changes to country-of-origin labels on meat products, farm-subsidy payment limits and a proposal to ban states or localities from adopting laws restricting production practices in other jurisdictions as a condition for sale within their own boundaries.

Negotiators are “pretty much” agreed on the food stamp program, Senate Agriculture Committee Chairwoman Debbie Stabenow, a Michigan Democrat, said last month.

An extension to the five-year farm bill that passed in 2008 expired Sept. 30. That may force the Agriculture Department to reinstate farm programs governed by the 1949 law, potentially doubling dairy prices.

The Senate farm bill is S.954. The House bill is H.R. 2642.

To contact the reporter on this story: Alan Bjerga in Washington at abjerga@bloomberg.net

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