With its last-minute New Year’s Day deal, Congress has pulled Americans back ever so slightly from two approaching precipices. First, of course, was the “fiscal cliff,” which has received most of the attention. But the agreement also kept the country from driving over the “dairy cliff,” which could have caused milk prices to double in fairly short order.
As The New American reported in late December, because Congress had not passed a new farm bill to replace the one that expired in September, federal milk policy in 2013 was set to revert to that of the Agricultural Act of 1949, the last permanent farm bill passed. That law requires the federal government to purchase milk at about twice the current market price to help cover dairy producers’ costs. Under such a policy, farmers would naturally choose to sell to Uncle Sam first, creating shortages that would drive the price of milk up to perhaps double its current price, causing headaches for both consumers and food processors that use dairy products.
The latest legislative compromise averts this potentially disastrous outcome by extending portions of the current farm bill through September. That means the government will continue its existing policy of purchasing dairy products from farmers only when the price of milk falls below a set minimum — something that has not occurred in recent years — for the next nine months, after which the 1949 policy will take effect if another farm bill is not passed.
In addition, the farm bill extension continues existing crop subsidies, paid regardless of commodity prices, to the tune of $5 billion a year. In farm bills being considered last year, both the Senate and the House of Representatives had eliminated those subsidies.
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