Commentary: Don’t look for another ‘dairy cliff’

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Dairy Cliff Late last year, consumers were warned that milk prices could double because of the “dairy cliff.”

The problem was averted when Congress passed stop-gap legislation on Jan. 1. People gave a sigh of relief, thinking the issue would be addressed in a new farm bill later this year. But with last Thursday’s dramatic rejection of a farm bill by the U.S. House of Representatives, the “dairy cliff” could loom again.

 It could conceivably happen next Jan. 1.

“It’s still two months away,” points out Chris Galen, senior vice president of communications at the National Milk Producers Federation. That gives Congress some more time to work things out, “and there seems to be much greater interest in getting a new bill done in 2013,” he adds.

A bipartisan conference committee met for the first time last week and pledged to get differences worked out so that a new farm bill could be voted upon by Congress.

“We’re getting much closer to a new farm bill now, compared to where we were 12 months ago,” Galen said.

Yes, without a new farm bill or extension of the old one, dairy policy could revert to a 1949 law (also known as permanent law). That, in turn, will increase 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). If that happens, milk prices could go to $38 to $42 per hundredweight ― and consumer prices could double.

But don’t expect it to happen. Galen and others say the prospect of reverting to 1949 permanent law is rather dim at this point.

There may be a hill to climb, rather than a cliff, but Congress will somehow get it done rather than catching more blame from constituents. Congressmen caught enough grief over the government shutdown; they don’t want to catch more over high milk prices.

Read this interesting (and related) article from the Visalia Times-Delta.



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