Milk prices are based on a farm bill before Congress
Friday, December 28, 2012
If not passed by New Year's Eve, milk prices could double
(Columbus) -- It's not just the "fiscal cliff" that is cause for concern at the end of the year. Congress still hasn't acted on a Farm Bill which expires on Tuesday as well.
"I'm not real confident that we're going to have one by the beginning of the year, but I think we'll have one not too far into the distant in the future beyond that because of all of the ramifications going forward that could happen not only with farmers but food and nutrition," said Ohio Farm Bureau Federation President Steve Hirsch.
One of the biggest impacts to consumers could come with the price of dairy products. That's because The Agricultural Act of 1949 contains the basic provisions for setting milk prices. It was passed when most dairy farms milked cows by hand and production was significantly lower than it is today. The act is superseded every time a new farm bill is passed, but if no new bill or extension is passed, the old act goes back into effect. Some experts say that could take prices to $8 per gallon.
It could also have a huge impact on schools which are required to buy milk.
"I'm pretty sure they have some ways to drag their feet a little bit maybe and stall so they'll get a little more time to do something about it before they actually get into the market," Hirsch said.
If the government is forced to buy milk at the higher rate it could mean a big pay day for dairy farmers, but Hirsch says it would be a short-term windfall and have long-term consequences because it could force a lot of consumers to avoid buying milk.
Hirsch says the Farm Bill is about more than just farming. More than 80 percent of the bill deals with funding for food assistance programs. It also impacts crop insurance, a safety net Hirsch says is vital to farmers.
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