US to Face Dairy Cliff: Milk Prices will Soar if Farm Bill Doesn’t Pass

Dairy Cliff Farm Bill

Last week, it was reported how the U.S. could see milk prices soar if Congress did not take action before the end of the year. That action is in the form of a new farm bill that has been waiting to be passed. Now only a few days until the end of the year, the U.S. faces a ‘Dairy cliff’ and shoppers could see milk prices soar to $6 to $8 a gallon if a new bill is not passed that amends farm policy that dates all the way back to the Truman presidency.

America has been for some time now, focused on heading toward a “Fiscal cliff” that without a compromise between the two parties, a combination of spending cuts and tax increases would take effect in January that many experts warn would harm the economy. It is true that this would not immediately cause another recession – spending cuts are structured to phase in within a decade and tax hikes could be reversed legislatively in Washington.

With everyone focused on the dangers of going over this cliff, Congress has virtually forgotten about another cliff that if we go over would be harmful to every shopper and take effect within weeks; not years. The impasse over passing a new farm bill will effect billions of dollars in agriculture programs and without any last-minute solutions by Congress, the government would be forced to follow an antiquated 1949 farm law that would make Washington have to buy milk at extremely inflated prices. This would create higher prices in the dairy section with milk costing now an average of $3.65 per gallon.

The higher prices would be figured out by what the dairy farm production costs were back in 1949. Milk production, during this time, was almost all done by hand. As a result of making adjustments for inflation as well as other technical formulas, the government would have no choice because of law to buy milk at roughly twice the present market prices to maintain a stable milk market.

However, the market would be anything but stable. To begin with, farmers would experience a financial windfall as they hurried to sell dairy products to the government at increased prices than those they would end up with on the commercial market. As a result, prices that customers would pay at the supermarket would rise as shortages developed and fewer gallons of milk were present for both consumers and for manufacturers of products like butter and cheese.

Shirena LaClare, a mother of two that lives in Yakima, Washington, said, “Jeez I couldn’t imagine it being almost 8 dollars or something. That would be too much to provide for my kids.” There are some economists that are predicting the average costs in stores would be $7 a gallon.

DeVries Family Farm Owner Tom DeVries talked with KIMATV and said, “When milk prices go up that high, we end up just losing our customer base. And, in the long run it probably wouldn’t be good for our industry.” KIMA asked, “As a dairy farmer, are you concerned about the so-called “dairy cliff?” DeVries replied, “No at this point I’m not, if they don’t pass it, we’ll just have to make adjustments to learn how to live with what we have.”

Of course, farmers and shoppers differ in their opinions on if we end up going over the “dairy cliff.” While farmers KIMA spoke with seem not too concerned, shoppers say the last thing they want to be forced to do is to dig deeper in their spending budget for groceries.

LaClare said, “It’s expensive,” said LaClare. “It’s like five dollars, six dollars for like a pound of cheese. And, it’s going up there. The milk is like four dollars, if not even more.”

As for the USDA, a spokesperson talked with Action News and said there is hope that Congress will take action regarding the bill soon. The agency feels that would prevent uncertainty for everyday shoppers and dairy farmers.

Something else to keep in mind is that the Farm Bill also provides support for food assistance programs as well as disaster relief for a wide range of crops. Economists predict that if Congress fails to pass a new Farm Bill, consumers wouldn’t notice increases in prices until weeks into the New Year.

‘Milk Cliff’ Could Mean $7 per Gallon Milk in 2013

Congress failed to pass a new farm bill this year, causing a 1949 law to double the price of milk.

Farmer Expects to Benefit from Dairy Cliff

The owner of Triple A Farms in Bowman, S.C. says an expired farm bill is going to hit consumers the hardest and the so-called dairy cliff may just work in his favor.

Farm and Dairy Industry May be Headed over Fiscal Cliff

America’s farm and dairy industry may be headed over fiscal cliff.

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