WASHINGTON - Farm-state lawmakers have agreed to a one-year extension of the expiring farm law that, if enacted, would head off a possible doubling of retail milk prices to $7 or more a gallon in early 2013.
The extension would end a 32-month attempt to update farm subsidies dating from the Depression era, when farmers were crushed by low prices and huge crop surpluses, to meet today's high-wire challenges of tight food supplies, high operating costs and volatile markets.
House Agriculture Committee Chairman Frank Lucas, an Oklahoma Republican, said on Sunday he hoped the legislation would be passed by Congress and signed by President Barack Obama by Tuesday to avoid higher prices for milk in grocery stores.
The bill was listed among measures that could be called for a vote on Monday in the House of Representatives although action was not guaranteed. House Republican leaders refused to call a vote during the fall on a full-scale, $500 billion farm bill on grounds it might fail because it did not cut spending enough.
Grain, soybean and cotton growers would get another round of the $5 billion "direct payment" subsidy that all sides agreed to kill in a new farm bill. The payments are made regardless of need. Reformers say the payments are unjustified when crop prices and farm income are at near-record levels.
Disaster money and a new dairy program
Also in the extension, lawmakers would revive agricultural disaster-relief programs that ran out of money a year ago and create a new dairy subsidy program. It would compensate dairy farmers whenever milk prices are low and feed prices are high. The so-called margin protection program would require farmers to limit production to avert a long run of low dairy prices.
Traditionally, the dairy program sets a minimum price for milk through government purchase of butter, cheese and dry milk. If Congress does not act, the dairy support price will revert on Tuesday to the level dictated by an outmoded 1949 law and which is roughly double the price now paid to farmers.
The potential retail milk price has been estimated at $6 to $8 a gallon versus current levels near $3.50.
Agriculture Secretary Tom Vilsack, during an interview broadcast by CNN, said higher milk prices - if it comes to that - would ripple throughout all commodities "if this thing goes on for an extended period of time."
Sen. Debbie Stabenow, chairwoman of the Senate Agriculture Committee, said the "responsible short-term farm bill extension ... not only stops milk prices from spiking, but also prevents eventual damage to our entire agriculture economy."