Montana News

"Dairy cliff" looms without new federal Farm Bill

Posted: Dec 30, 2012 8:59 AM by Robin O'Day -MTN News
Updated: Dec 30, 2012 9:01 AM

Even if Congress manages to patch together a makeshift bridge across the so-called "fiscal cliff" by year's end, it's looking increasingly doubtful that a new farm bill will be included as one of its planks, and that could mean milk prices will spike to $6 to $8 a gallon come January.

That possibility is worrisome to some Montana consumers, such as James Curtis, who buys milk often for his 16-month-old daughter, and says it's shocking to think milk could get more expensive.

"It was really surprising because it's already $4. I remember when it was $1.50 and I'm not even that old," Curtis said.

Curtis says that could mean skimming down an already tight budget to feed his family.

"All throughout the day it's her favorite drink, she doesn't like juice, she drinks milk, Vitamin D everyday, morning, night, throughout the day, so it's definitely going to be interesting having to spend $8 every couple of days because I go through a gallon every couple of days," says Curtis.

Bitterroot dairy farmer David Lewis says the new price of milk will far exceed the price of what it actually costs to produce the product.

"It probably will never happen. If it did, it doesn't mean that anybody will pay us that much for milk, it means that the government has to step in to buy and try to create a demand for the milk," Lewis explained.

"I'm reasonably sure they'll fix it before it gets that far. Sounds great, but I haven't booked a trip to Hawaii yet, so we're good," he added.

Government price supports for milk will revert to 1949 levels without a new bill, going back to a time when farms were more labor intensive.

That old system doesn't match today's more efficient dairies, along with a wider selection of beverages.

"The same thing that happens with $6 gasoline, we quit buying it, we back off, we use less, we maybe dilute it. Maybe drink soda pop, because soda pop is all of a sudden way cheaper," says Lewis.

Although Lewis says people shouldn't hit the panic button yet, consumers like Curtis are reluctantly preparing themselves for the worst.

"It's kind of weird how a few people in Washington can kind of decide, what we're going to have to be careful of," Curtis said.

The bill affects all dairy products, including powdered milk and cheese.

CBS News reports that the "dairy cliff" is just the most immediate of what would be gradual price increases on foods across grocery stores if Congress doesn't pass a farm bill to replace the one that expired nearly three months ago.

Technically, farm regulations since the end of September have been operating under a 1949 "permanent" law. Because the 2008 law covered all crops planted in 2012, though, and federal funding for many agricultural programs is assured through March 2013, lawmakers have enjoyed a bit of a grace period until January 1, when products like milk could skyrocket to prices based on dairy farm production costs 64 years ago.