The impact of a year-long discussion in Washington about the 2012 farm bill is now up in the air following the November elections, according to Purdue University agricultural Economist Roman Keeney.

When the new Republican House majority takes up the farm bill issue, farmers should expect lawmakers to focus on three major areas: Brazil, budget and baseline.


In 2009 the World Trade Organization allowed Brazil to impose sanctions against the United States after ruling U.S. cotton subsidies were illegal under the WTO framework. In April the United States struck a last minute deal to send $147.3 million dollars in annual support to Brazilian cotton production.

"That deal is a temporary resolution to the WTO case that Brazil won against U.S. cotton subsidy programs several years ago," Keeney said. "The major issue in resolving the WTO case is for the U.S. to bring its policy into compliance in the 2012 farm bill."

Sending the support dollars to Brazil is not a huge economic stress to the United States, Keeney said, but it brings attention to agricultural spending at a time when the budget deficit is a major public concern.


The federal budget deficit emerged as a significant political factor in the November elections.

"When you consider both the moderate impact of the recession on U.S. agriculture and the negative views of crop subsidies by those struggling to weather the economic downturn in the non-farm population and in other countries the U.S. trades with, it may be difficult for Congress to justify writing new farm legislation without reduced spending," Keeney said.

In practice, price levels have been high enough that agricultural subsidy spending has been at a minimum the past three years. Annual direct payments that do not adjust with market conditions are the majority of subsidy spending and that is where legislators will need to make cuts to generate budget savings in the farm bill.