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Dairy Cliff: $8 milk not realistic even without Farm Bill extension


MADISON, WI  (WSAU)  -  The Fiscal Cliff has been all over the news, and you may have heard there was a “Dairy Cliff” looming that could run the price of milk for consumers up to nearly $8.00 per gallon.

Mark Stephenson is the Director of Dairy Policy Analysis at UW-Madison’s College of Agricultural and Life Sciences and UW-Extension.

He says the threat of dairy prices skyrocketing is real, but you should not panic. Stephenson says we have legislation on the books from 1949 that is permanent law. The Farm Bills that pass every few years are temporary legislation that usually supersedes the permanent law. Stephenson was not optimistic we would have a new Farm Bill by the new year, but Congress has a tentative agreement to extend the old Farm Bill for one year, with a vote planned for early this week.

Without a current Farm Bill, he says the old permanent law would have kicked in. “Our old permanent law would kick into place, and today that would mean that the government would set a goal to try to support dairy prices at a level that’s around $38.00 a hundredweight, which is about double what the current market prices are for dairy producers.” He says milk and cheese prices are likely to go up, but not as high as some reports claim. “We’ve heard a lot about $8.00 a gallon milk. If you double the farm value, that would mean that we could see maybe as much as $1.70 or $1.75 additional price on a gallon of milk, but that doesn’t take us to eight dollars yet.”

Stephenson’s advice to consumers: Enjoy what you normally do because, “Even if this (1949 package) goes into law, it would still be many weeks if not months before you would see the enactment and the actual impacts of something like this happening. We wouldn’t see higher prices anywhere in the dairy chain unless it’s purely speculation that’s moving it.”

Stephenson says, “We’ve gotten a little excited about this and we should. We should take care to think about what the consequences of inaction with our legislative branches really means, but this is not quite as much of a cliffhanger.” He says we would not have seen dire consequences for dairy in a day or two, since Congress still had a little time to fix the problem.

Work was done in committee to reconcile differences in House and Senate Farm Bills, and try to attach it to the last-minute “Fiscal Cliff” legislation with an up or down vote and no floor debate. Now that Congress has wrapped up it’s weekend work, the Fiscal Cliff legislation went nowhere and the Farm Bill was the only significant legislation they made progress on.