Doubling Of Price Of Milk Averted – For Now

Author: December 30, 2012 5:23 pm
Old photograph of little girl milking cow

A milk cow…starring subject of the “milk cliff”

The House and Senate actually got together and accomplished something.

Sorry – false alarm. CNN today reports it’s just another short-term extension agreement in the long line of short-term extension agreements the country has had to endure at the hands of this do-nothing Congress.

In case you’ve been overwhelmed with talks of the “fiscal cliff” and have therefore not been cognizant of the “milk cliff,” following is a quick summary:

The Farm Bill we have now is the Food, Conservation, and Energy Act of 2008 that had a September 30, 2012 expiration date. The Senate managed to pass its version of the 2012 Farm Bill back in June. All that was left to do was for the House to pass its own version, based on recommendations from the House Agriculture Committee, and then the two congressional bodies could amalgamate their editions and emerge with a shiny new conciliated bill. Easy ‘nuff, right?

Alas, after the House Agriculture Committee submitted their draft bill to the House – surprise, surprise – it never reached the Floor. Instead, the House wanted a one-year extension before having to create the 2012 Farm Bill, which was patently absurd, as it would have resulted in significant setbacks for the bill, such as the eradication of funding for conservation programs, renewable energy, and organic farming, to name just a few. So unpopular was it, that the sour-milk House immediately withdrew their proposition.


Consequently, the 2008 Farm Bill expired at the end of September – technically. Many of the programs continued under the governance of pre-Farm Bill law, and while some conservation funding was extended through other legislation, many of the conservation programs got shortchanged.

Why the hold-up? Same old, same old – conservatives don’t like the spending (particularly for the SNAP, aka food stamp program), and progressives didn’t feel that the Bill had enough, well, progressiveness.

So it was hopeful that an improved Farm Bill would be passed by this lame duck Congress no later than the end of the year, or risk yet another delay while a whole new proposal was being hashed out by the newly elected Congressional members.

But there’s another reason behind the importance of a year-end signed Farm Bill, and that’s the ‘milk cliff.’

See, the Farm Bill contains a program called “Dairy Product Price Support,” and here’s how it works: the government can guarantee the dairy industry that the price of milk will never fall below the “support price” which is calculated by determining the minimum price of milk needed to keep the industry stable. If the price of milk falls below the support price, the government simply buys milk products in order to increase the demand and inflate the price. Very little government spending on milk has occurred in recent years because the price of milk has been industry-supportive.

But, like the perishable nature of milk, that interesting program expired along with the expiration of the Farm Bill, and on January 1st, the program taking its place is from an agricultural act dating back to the 1940s where, instead of a “support price,” the government must pay a “parity price.” That price is calculated based on how much it costs the farmer (and cows) to produce the milk. Back in 1949, the price was set at twice what it costs farmers today, due to refined and large-scale dairy practices.

So come 2013, the government would have to revert back to its promise to maintain the high 1949 price and buy a whole lot of dairy products, while we milk consumers would have to pay a whole lot of money for dairy products – up to twice as much, to be precise.

But Democratic Senator Debbie Stabenow told CNN today that the House and Senate have come to an agreement to prevent this calamitous spike in dairy prices for at least a year. Farmers, in the meantime (along with consumers of farm products…pretty much all of us), will just have to keep hoping for a Bill that will actually provide the promised five-year security for our agricultural future.

“If a new farm bill doesn’t pass this Congress,” said Stabenow in her interview with CNN, “we’ll soon hold another markup and just keep working until one is enacted next year.”

Or the year after that. Or the year after that. It’s doubtful anyone is holding their breath.

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