Congress averts "dairy cliff"

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Tuesday night, the U.S. House of Representatives approved a "fiscal cliff" package from the Senate that rescinds tax increases for a majority of Americans, as well as extending federal dairy policy for another nine months in the absence of a new farm bill. 

The fiscal cliff package extends the Milk Income Loss Contract program through Sept. 30, as well as the dairy price support program. 

Because Congress had not passed a farm bill by the end of 2012, dairy policy on Jan. 1 would have reverted to a 1949 law without the fiscal cliff fix. That, in turn, would have increased federal price supports for cheese, butter and milk powder to 75 percent to 90 percent of parity (based on the purchasing power that farmers had between 1910 and 1914). That would have been the equivalent of $38 to $42 per hundredweight milk. 

Under this scenario, milk prices in the grocery store would have increased -- possibly doubling -- which led to the term "dairy cliff" in the national media. 

While the latest congressional action averts the "dairy cliff," it also postpones dairy policy reforms that were sought by the National Milk Producers Federation and approved last summer by the U.S. Senate and the House Agriculture Committee. The reforms, part of a larger farm bill, never got passed because the farm bill never made it to the House floor for a vote. 

In a statement Tuesday morning, following Senate passage of the fiscal cliff deal, National Milk Producers Federation president and CEO Jerry Kozak expressed frustration over the continuing delay of policy reforms. 

“The Senate’s vote earlier today on a nine-month extension of current farm policy is a devastating blow to the nation's dairy farmers," Kozak said. "After months of inaction, the plan that passed overnight as part of the fiscal cliff package amounts to shoving farmers over the dairy cliff without providing any safety net below...  

“Dairy farmers across the country have united behind the Dairy Security Act provisions in the original farm bills that have already been approved by the full Senate, and by the House Agriculture Committee.... 

”Despite the progress made in 2012 on the farm bill, we’re starting 2013 on a bad note. We oppose any farm bill extension of any duration that does not contain the Dairy Security Act, and resolve to work this year on achieving that as a long-term goal,” Kozak said.

The International Dairy Foods Association, meanwhile, was more congratulatory toward Congress’s efforts.

"We appreciate that the (fiscal cliff legislation) includes provisions that will avoid the resurrection of dairy policies from more than 50 years ago. This agreement allows Congress time to fully and openly consider future reforms to our nation's dairy policies,” said IDFA president and CEO Connie Tipton.

"Dairy manufacturers are an important segment of our nation's economy, and we are committed to working with Congress this year as formulation of the 2013 Farm Bill begins. The interdependence of this industry from farmer to consumer is critical, and our nation's dairy policies deserve to be updated and supported. We commend the bipartisan effort of Representatives Bob Goodlatte (R-Va.) and David Scott (D-Ga.) in proposing a margin insurance program ― a safety net ― for dairy farmers that does not impose new government rules and conditions on milk production. This approach has broad support from consumer and taxpayer groups, from farm organizations and from across the food manufacturing and retail industry,” Tipton said. 

Also, see “Fiscal plan averts ‘dairy cliff,’ buys time for farm bill” from Reuters. 

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north east  |  January, 02, 2013 at 05:44 AM

“Dairy farmers across the country have united behind the Dairy Security Act provisions in the original farm bills that have already been approved by the full Senate, and by the House Agriculture Committee.... " WOW jerry how can you say this when dairy farmers have never been asked? Editor why have you not done a story on this? No I don't expect an answer from you. You are fully under the spell of jerry and company and are unwilling to open you eye's. From what I have been told less than 40% of farms will participate. How is this good dairy policy?

Wi  |  January, 02, 2013 at 12:43 PM

Ditto's from Wisconsin. Most farmers I talk to are also against the DSA act or should we say dairy insecurity act. Also when I talk to our congressman and senators they all say the same thing, big coops are for the act and individual farmers do not want it. Dairy Business Milk Marketing Coop is one coop that is not in favor of it. As you stated farmers were never asked, big coop leadership just assumed farmers were for it. I think it is high time this leadership was changed, starting at the top with Mr Kozak and down. Mr Gallagher stated fluid milk sales have been going down for 30 or 40 years and he first realized this now! Another person that is due to be replaced. Football coaches don't last this long without positive results why do we allow this to happen with our coop leadership!

dairy farmer    
Lawton pa  |  January, 02, 2013 at 08:48 AM

I am beyond distressed at the ignorance of our elected officials.........I would like to invite any of them to come to our farm and work for one month, that's right seven days a week 24 hours a day and at the end of that month be further in the hole than when they started. That's what farmers have been facing for months. This delay in action is going to force more farmers out of business. WE NEED A NEW PRICING FORMULA FOR OUR PRODUCT AND IT NEEDS TO INCLUDE THE PRICE OF PRODUCTION!!! When will you be happy? When you have forced the dairy farmers out of business and we are all relying on foreign countries for our dairy products???????? When the agricultural land is lost never to be retained?

Rowdy farmer    
Ok  |  January, 02, 2013 at 10:01 AM

Steve, count me in the 60%

titusville pa  |  January, 02, 2013 at 10:50 AM

There is not one farmer that I know that thinks jerry and his Dairy Security act is a good idea. When will anyone atually speak to the dairy farmer and ask what we really think? I agree that there are very few publications that actually are on the side of the dairy farmer. And I will state also - where does the nation want it's dairy products imported from after the dairy farmers in America are all out of busines?

susie nash    
harford county md  |  January, 02, 2013 at 11:16 AM

I urge everyone to google New York Times Oct 27 2012 In Dairy Industry Consolidation, Lush Paydays and you will quickly see why everyone is completely ignoring the dairy farmers wants and need. We are the cash cows and the people steeling our money won`t let that change.

Texas  |  January, 02, 2013 at 11:31 AM

$38 milk would be 1949 75% of parity. What most don't know is that other commodities are already at 75% of parity such as corn, soybeans, wheat, and hay.... How about split the difference and set milk prices at $30 for at least a possible profit. We export some and import a lot. We haven't produced enough milk in the USA to supply our own demand for dairy products since about 1996. There is no surplus except created by imports.

NY  |  January, 02, 2013 at 02:33 PM

I was equally outraged to read that farmers are supposedly demanding that bill. It is not at all true of any of them that I have heard from on the topic and I talk to a lot of people

farm wife    
north central PA  |  January, 02, 2013 at 04:59 PM

I can't even say WOW! As we all expected, the dairy farmer gets the bad end of the deal once again!! When will it ever be a win win situation for the American dairy farmer? We feed the people of this country and we are hardly able to feed ourselves anymore. I have to agree with the dairy farmer from Lawton, PA. The longer it goes, the more farmers are going to be " going." Don't get me wrong, I like sports, but why can't we get the respect the professional athletes get... after all, we are providing you food, not just entertainment!!

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