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Election-year politics affect fate of farm bill and disaster relief

Certainty – that’s what business owners need in order to invest, expand, and hire workers. That’s the argument Republicans have been using for months to urge President Barack Obama to agree to extend current tax rates for another year.

Now with drought afflicting states from Florida to Wisconsin to Oregon, it is Obama who’s using the “certainty” argument, saying that Congress must “pass a farm bill that not only helps farmers and ranchers respond to these kinds of disasters, but also makes necessary reforms and gives them some certainty year-round.”

Business owners affected by the drought say they understand why farmers are getting so much help and attention, but they want to make sure they don't get left behind. CNBC's Phil LeBeau reports.

The Senate passed its $970 billion farm bill on June 21, but the House hasn’t acted on $958 billion farm legislation passed by the House Agriculture Committee last month.

“Too many Americans are suffering right now to let politics get in the way” of passing a new farm bill, Obama said last Saturday in his radio address. But politics seem inescapable, especially 11 weeks before Election Day.

Obama, who campaigned this week in drought-stricken Iowa, is trying to use the drought as a political lever to get the House to pass its farm legislation and come to terms with the Senate so a final bill could be sent to him for his signature.

That seems unlikely to happen before the current farm bill expires on Sept. 30.

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If the farm bill does expire and if a new one isn’t signed into law, it will not affect crop insurance for farmers. Crop insurance is authorized not through the farm bill, but through a separate law. The most recent five-year agreement between the federal government and the private companies that carry out the farm insurance program was reached in 2010.

But next year growers of corn, soybeans and other crops may need to pay higher premiums for their crop insurance – because a significant loss of crops due to drought or other factors lowers their average production history and that affects premium levels, said Sam Willett, senior director of public policy for the National Corn Growers Association, a group that represents more than 36,000 corn farmers.

Disaster assistance programs for livestock and dairy producers and for growers of specialty crops such as cherries expired on Sept. 30, 2011. The Senate-passed farm bill would reauthorize that disaster assistance money.

Responding to the drought, the House did pass a stand-alone $256 million disaster relief bill to help farmers, ranchers, orchard owners, and nursery tree growers on Aug. 2. The vote was 233 to 197, with 35 Democrats, many from farm states such as Iowa and Indiana, joining 188 Republicans in supporting the bill. But that measure is not a full five-year farm bill.

House Agriculture Committee chairman Rep. Frank Lucas, R-Okla., said, “This is not a long-term solution, but it takes care of the problem until we can get a five-year farm bill on the books…. I am committed to giving certainty to our farmers and I plan to work toward that goal when we return in September.”

Grocery stores around the nation may soon see a ripple effect of the drought, with animal-based, perishable foods costs increasing by nearly 5 percent in the coming year. NBC's Janet Shamlian reports

Although the drought and the food stamp program – or Supplemental Nutrition Assistance Program (SNAP) – aren’t directly related to each other, it’s the opposition to SNAP funding levels that is one of the biggest obstacles standing in the way of an accord on a new farm bill. This isn’t surprising since nutrition assistance spending accounts for about 80 percent of the total cost of the farm bill.

Among many congressional Republicans, “There’s substantial concern about the level of nutrition program cuts not being high enough” and “you have the opposite on the Democratic side” – a belief that SNAP was cut too much, said Willett.

The Senate farm bill would reduce outlays for SNAP and other nutrition assistance programs by $4.5 billion over ten years, but would still spend nearly $770 billion on SNAP. The House Agriculture Committee farm bill would reduce SNAP outlays by $16 billion.

The Corn Growers Association supports an effort in the house to get 218 members to sign a discharge petition that would force the Ag Committee’s bill to be brought to the House floor for a vote.

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Iowa Gov. Terry Branstad, a Republican, told NBC’s Chuck Todd on Daily Rundown Wednesday that “the market is adjusting” to the drought conditions and that both his state and the federal government are taking steps to help livestock producers such as allowing grazing on state land and opening conservation reserve lands to grazing.

As the nation's largest corn producer, Iowa has been particularly susceptible to this year's brutal drought. Despite some desperately needed rain last week, more than half the state's corn crops are in "poor" or "very poor" condition. Gov. Terry Branstad discusses.

Explaining the opposition by some Republicans to the farm bill, Branstad said, “The biggest problem I think a lot of people have is a massive expansion of the food stamp program. We have more people on food stamps than ever before; they’ve liberalized the rules, and a lot of people think they need to tighten that up, just like we reformed welfare in the 1990s … .”

It’s not only food stamps – conservative farm state Republicans have an array of complaints about the Obama administration’s policies toward farmers and ranchers. Agriculture Committee member Rep. Tim Huelskamp, R- Kan., issued a statement Wednesday accusing the administration not only of “vastly expanding the food stamps rolls by 45 percent," but of “continuing the regulatory assault on our farms and ranches” and “supporting a huge increase in the death tax at the end year.”