Fiscal Dairy Cliff: Farm Bill Stall Could See Milk Prices Double

Kathy Coatney/Farm Bill Facts

Milk prices could double by January if Farm Bill fails.

Leaving cookies and milk for Santa could get pretty expensive if Congress doesn't pass the Farm Bill, created in 1933 to provide subsidies to U.S. farmers during the Great Depression. 

Since then, the Farm Bill has grown and expanded to include not only farm subsidies, but disaster assistance, crop insurance, livestock disease prevention, and conservation issues. According to the American Farmland Trust, the bill, which is passed by Congress every five - seven years, helps American farmers stay in business and helps regulate the prices of crops by providing minimum amounts that crops and products can be sold for.

The last farm Bill was authorized by Congress in 2008 and the bill was up for reauthorization this month.


The New York Times reports that although Congress was hoping to pass the new Farm Bill by the time they adjourned on December 14, they were "deadlocked on two issues -- cuts in crop subsidies and reductions in food stamps." 

Without a new Farm Bill, U.S. farm policy would go back to the Agricultural Act of 1949, which guarantees farmers a minimum price for dairy products.  What that means to the public is that farmers would sell their milk to the Government for an artificially high price.  That would cause milk and domestic cheese prices to surge for consumers as stores scramble to get milk products on their shelves at higher prices.

Then, when prices have skyrocketed, the Government might sell its stockpile of the milk it purchased, causing prices to plummet, causing the prices to drop. Farmers and consumers would be left to ride out this financial roller coaster.

It's likely Congress will provide a temporary extension of the current Farm Bill. Otherwise, milk prices could double in price as early as January 2013, with some people predicting  a gallon of milk going for $6 - $8 a gallon.

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