Milk prices likely could doublePublished 9:41am Monday, December 24, 2012
By Elizabeth Baier, Minnesota Public Radio News
GOODHUE — As the year comes to a close, many in the nation’s capitol are focused on the so-called the “fiscal cliff” — the combination of spending cuts and tax increases that will take effect in January if Congress does not reach a new budget deal.
But there’s also a so-called “dairy cliff” looming that has farmers across the Midwest anxious. Because Congress failed to pass a new farm bill, price levels for milk are set to expire at the end of the year. If that happens, the price of milk will nearly double.
Rising prices would hurt consumers and also have big ramifications for dairy farmers like Dave Buck, who has worked his land in southeastern Minnesota for 21 years.
Buck, 56, sells about 34,000 pounds of milk a day from 450 cows to the Hastings Co-Op Creamery. Much of it is bottled and sold to ice cream companies and area schools.
The looming milk crisis troubles him because, without action from Congress, the industry’s current price support system will expire and be replaced by a 1949 law that could double the wholesale cost of milk. Under current law, the federal government helps set a floor on the price of milk by buying milk when it falls below $16.94 per hundredweight, a typical unit of measurement in the industry.
If there is no farm bill by Jan. 1, provisions of the 1949 will take effect, setting a new price support level of more than $38 per hundredweight.