With Farm Bill Stalled, Consumers May Face Soaring Milk Prices
http://www.nytimes.com/2012/12/21/u...dxnnlx=1356095192-La9z3tHixRUxlw1pEGpmwg&_r=0
WASHINGTON — Forget the fiscal crisis and the automatic budget cuts.
Come Jan. 1, there is a threat that milk prices could rise to $6 to $8 a gallon if Congress does not pass a new farm bill that amends farm policy dating back to the Truman presidency.
Lost in the political standoff between the Obama administration and Congressional Republicans over the budget is a virtually forgotten
impasse over a farm bill that covers billions of dollars in agriculture programs. Without last-minute Congressional action, the government would have to follow an antiquated 1949 farm law that would force Washington to buy milk at wildly inflated prices, creating higher prices in the dairy case.
... if 1949 rules go into effect, the government would be required to buy dairy products at around $40 per hundredweight — roughly twice the current market price — to drive up the price of milk to cover dairy producers’ cost.
For dairy farmers like Dean Norton in upstate New York, who are struggling with high feed costs caused by this summer’s drought, a jump in prices would be welcomed.
“But it would be short-term euphoria followed by a long hangover that would be difficult for us to recover from,” said Mr. Norton, who is president of the New York Farm Bureau. “I don’t think customers and food processors are going to pay double what they are paying now for dairy products.”