Dairy Crisis Looms without Farm Law: Milk prices could more than double
Record-Journal staff
DURHAM - With milk prices low and feed costs high, the folks at Greenbacker Dairy Farm in Durham have found themselves receiving some financial assistance over the past several months, along with dairies across the country, in the form of a federal farm subsidy.
It's not all that much, "but it helps," said Joe Greenbacker, who, with his family, runs the expansive farm on Route 68 - and whose ancestors have farmed in the region for centuries.
Yet the farm is about to receive its last payment, because the program that provides the subsidy expired Oct. 1, along with several other agriculturerelated programs under the federal farm law.
A new five-year farm bill has been stuck for months in partisan gridlock in the U.S. House after being passed in the House Agriculture Committee and the U.S. Senate.
Though it's already got farmers - particularly dairy producers - concerned, analysts say the absence of a farm bill could quickly affect consumers nationwide. Milk could double or triple in retail price on Jan. 1, 2013, because of another dairy program under the bill that will expire at the end of the year. The program controls how prices of the commodity are formulated. The calculations would revert to those of a 1949 law which would likely cause the price of milk to dramatically increase.
The retail price, now over $3 a gallon, could go to $7 a gallon or more.
Chris Galen, spokesman for the National Milk Producers Federation calls this the "dairy cliff."
"It's still rather theoretical at this point - we've never had this happen before. We're not in the type of situation where there's a precedent," said Galen, who hopes the conversation remains theoretical. "Congress just needs to take appropriate action."
Though some of the price increase would go to the farmers, they're not rejoicing.
"I think people wouldn't buy products anymore," said Melissa Greenbacker, who runs the farm with her father.
Her father said he doesn't think the government could actually let the increase occur.
"I can't believe that the federal government, even if they didn't pass the farm bill, there wouldn't be some executive order to prevent that from happening," Joe Greenbacker said. "It would be so disruptive, really if the price shot up that much all at once, sales of not just milk but other dairy products would drop off - it would be a bad, bad thing."
The new farm bill was passed by the U.S. Senate in June, and a version came out of the House Agriculture Committee in July, but it has been mired in the House ever since. The issue, many say, is not with the agriculture portion, but with the national food stamp program called the Supplemental Nutrition Assistance Program, or SNAP, which is bundled into the legislation. House Republicans want to cut SNAP funding while Democrats want to avert cuts.
The House recessed last month without voting on the bill, and those advocating passage are hoping they pick it up during a lame duck session after the Nov. 6 election and before the New Year. If not, some effects could be felt starting in the next few months, but many would become evident later next year, according to Robert L. Maurer, the district director for the Connecticut Farm Service Agency, which administers U. S. Department of Agriculture programs.
Dairy isn't the only industry affected by the lack of a Farm Bill. According to Maurer, corn producers in Connecticut would lose subsidies as well without the "Direct and Counter-Cyclical Program," as would cotton, rice, wheat and other producers throughout the nation.
A crop disaster assistance program would also be lost. The program insures producers who cannot receive federal crop insurance because of what they grow - produce such as vegetables and peaches - so that in case of natural disasters, catastrophic crop losses are covered, according to Maurer.
"Let's say we have a freeze, a characteristic freeze that wiped everything out (in spring). Normally, the program would kick in next summer," Maurer said. "It definitely would be an impact on our producers and that safety net. We do have quite a few growers that are not covered."
The program the Greenbackers had been receiving assistance from is called the Milk Income Loss Contract, or conveniently the MILC program, and it provides payments to dairyfarmers when milk prices fall below a certain level.
The Greenbackers' farm produces about 1,000 gallons of milk each day from the 150 cows that actively give milk, out of the 310 they own. Their milk mostly goes to Guida's Dairy in New Britain. The New England-New York dairy cooperative they're a part of, called Agri-Mark, decides on a daily basis where it will end up. The cooperative is also known for its Cabot and Mc-Cadam cheese brands.
The family has been farming in the area since 1723, when the king of England bestowed a land grant upon their ancestors, according to the Greenbackers. They moved the farm from Meriden to Durham in the mid-1980s, but they still own the Agway in Meriden.
Greenbacker said the amount the farm gets from the MILC program has varied, rising recently to about 10 cents a gallon. In the new bill, the MILC subsidy would be replaced by a program that would allow farmers to take insurance that would provide payment when the difference between the cost of feed and milk prices decreases to a certain amount.
This controls for rising grain prices, due recently, Joe Greenbacker says, to drought and the growing use of corn to make ethanol and the subsidies for that. His cows are getting more and more hay and corn grown on the farm.
"We've cut back on how much we're feeding the cows - not on how much total they get, but how much grain we're feeding them just because of the cost, so we're not making as much milk as we could, but it's just not justifiable with the current prices," Joe Greenbacker said. The family hopes that Congress can come to a solution quickly on the bill.
"This current environment is very discouraging," Joe Greenbacker said.
lsalerno@record-journal.com (203) 317-2235 Twitter: @LaurieSalernoRJ
