Tags: Farm | Bill | milk | 8

NYT: Milk Prices Set to Soar Next Year as Farm Bill Expires

Friday, 21 Dec 2012 08:31 AM

Milk prices could soar as high as $8 a gallon next year from an average $3.65 today if Congress fails to pass a new Farm Bill, which governs subsidies, price supports and other agricultural regulations, The New York Times reports.

The bill, stalled in Congress as lawmakers debate ways to avoid the fiscal cliff, would revert government milk purchases based on production costs from 1949, when production was done by hand.

Failure to pass a new bill would force the government to guarantee a minimum milk price at much higher levels than today.

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The government sets a minimum price for milk to help cover production costs for the country’s farmers.

Farmers would see a financial windfall at first, and then see demand plummet.

“[I]t would be short-term euphoria followed by a long hangover that would be difficult for us to recover from,” said dairy farmer Dean Norton, who is president of the New York Farm Bureau, The Times reported.

“I don’t think customers and food processors are going to pay double what they are paying now for dairy products.”

Congress passes a new Farm Bill every five years, with the last bill passed in 2008.

Congress could punt on the price of dairy products if Jan. 1 comes and goes without a deal, though administration officials are growing uneasy.

“The uncertainty of not knowing what the policies are going to be will create difficulties,” Secretary of Agriculture Tom Vilsack said at an event sponsored by the U.S. Chamber of Commerce, according to Time.

“We need a Farm Bill and we need it now.”

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