Source: limk.com via Limk on Pinterest
For background on the milk cliff, read: Understanding The 'Milk Cliff'
Here's where the cliff comes:
The minimum price for milk, called the "support price," is set in the farm bill. The farm bill is set to expire on Jan. 1, and here's the catch: If that happens, the minimum price reverts to the price set more than 60 years ago in the Agricultural Act of 1949. That price is a parity price, which means it was calculated based on how much it cost farmers to make milk during the "golden age of agriculture" 1910 -1914. Things have changed a lot since then, and costs for farmers today (equipment, labor, feed, cows) are radically different.
The parity price set in 1949 is $39.53 per 100 pounds — right now, farmers are getting half that, $19.50 per 100 pounds of milk.
If Congress doesn't do something, the government will find itself buying a lot of cheese, butter and dry milk come Jan. 1, and even worse, it will essentially be paying double the price. Those higher prices will then trickle down to the grocery store where the rest of us could see milk prices go from around $4 a gallon to something more like $6 a gallon.
You might be asking yourself, Self, "why is the federal gov't buying dairy in the first place to control prices?" Well, so was I….
House prepares three 'milk cliff' bills for votes
By Erik Wasson
House leaders have prepared three bills to deal with the looming "milk cliff" for floor action this week.
The three bills are aimed at preventing a spike in dairy prices looming in the new year.
Because Congress has failed to renew farm programs, an underlying 1949 law is slated to kick in. This would force the government to buy up American milk at inflated prices and the purchases are expected to possibly double the price of milk at the grocery store as supplies dwindle.
Late Saturday night, House Republicans posted the three bills on the House Rules Committee website, setting up possible Monday votes under layover procedures put in place in this Congress.
One bill would extend the expired 2008 farm bill, which expired Sept. 30, for one year. The second would provide for a farm-bill extension through January and a third would just extend dairy programs through January.
"Clearly, it is no longer possible to enact a five-year farm bill in this Congress. Given this reality, the responsible thing to do – and the course of action I have long encouraged if a five-year bill was not possible – is to extend the 2008 legislation for one year. This provides certainty to our producers and critical disaster assistance to those affected by record drought conditions," said House Agriculture Committee Chairman Frank Lucas (R-Okla.) in a Sunday statement.
via House prepares three 'milk cliff' bills for votes – The Hill's On The Money.
