Logo: Bowl of Spilled Milk and Cereal (David Arky-Corbis)
An agriculture subsidy that expires on Jan. 1 could result in milk prices almost doubling in 2013.

That's scary news to consumers, who already devote more than 10% of their grocery budgets for milk, cheese, yogurt and other dairy products.

"If you like anything made with milk, you're going to be impacted by the fact that there's no farm bill," U.S. Secretary of Agriculture Tom Vilsack said on CNN.

"Consumers are going to be a bit shocked when instead of seeing $3.60 a gallon for milk, they see $7 a gallon for milk," he added.

According to this MSN Money article, the price difference wouldn't be noticed for a few weeks into January. That means there's time for Congress to extend the current farm bill or draft a new one.

Do you want to gamble on Congress getting anything done that quickly?

Most of us can't keep a cow or goat. Plenty of us don't want to go dairy-free. That's why I'm suggesting a half-dozen tactics to deal with the possibility of a sharp price jump.

Best-case scenario: Congress finds a solution and your grocery budget doesn't get slammed.

Worst-case scenario: The farm bill is delayed for weeks or months, but you will have done what you can to minimize the effects of costlier dairy products.

Stock up

1. Buy marked-down milk.
Milk gets reduced within a couple of days of its sell-by date. Ask the dairy department manager if there's a particular time of day when employees set out the discounted milk; if so, try to shop right around then.

This "old" milk should last for days past its deadline if you keep it refrigerated at all times. Don't leave it on the breakfast table, or on the counter while you cook; pour out what you need and put the rest away immediately. I've had milk last as long as a month past the sell-by date. You could also…

2. Freeze it.
When you see a decent price -- either marked-down or as a loss leader -- get extra for the freezer. You'll need to remove a cup and a half from the plastic jug. According to the National Center for Home Food Preservation, milk shouldn't be frozen in cardboard cartons.

If cardboard is what you have, pour the milk into wide-mouthed canning jars with a half-inch of head space for pints and 1 inch of space for quarts. Narrow-mouthed containers of either size need 1½ inches of room for the milk to expand as it freezes.

Note: Frozen milk looks yellowish, but once thawed reverts to normal appearance. It may separate somewhat, so stir or shake before using. Some say the texture changes; personally, I've never noticed a difference. If you do, then use thawed milk for cooking or mix it with the next partially used gallon in the fridge.

Make your own

3. Buy powdered milk.
Now's the time to buy, before any price increases take effect. Some people drink this stuff straight -- it helps if the liquid is extremely cold -- and others mix half a gallon of reconstituted milk with half a gallon of regular milk.

Dried milk in a southern New Jersey supermarket worked out to $4.52 per gallon. If you plan to buy a lot of the stuff I'd suggest doing a Bing search for a better price. The kind that my dad buys costs about $3.77 per gallon, not counting shipping costs of $6 to $12 (depending on the size of the order).

But dried milk keeps for years, so it's good to have on hand in case you run out. It also works well for cooking and bread making.

4. Make some products at home.
Remember, the price of all dairy-based products will go up. Making yogurt, cream cheese, cottage cheese, sour cream and soft cheeses like Indian paneer and Mexican queso fresco is as simple as heating milk, adding an activating agent (buttermilk, lemon juice, yogurt, cider vinegar) and draining the resulting product.

I've turned close-dated milk into terrific homemade yogurt, which is surprisingly easy to make. I hope it works just as well in recipes like these: 


Use less
5. Buy and dilute whole milk.
Some members of the Frugal Village message board buy whole milk and mix it with up to 50% water. I've done this myself in the past for cooking or to use on my breakfast oatmeal.

Note that diluting milk also means diluting the vitamins and calcium. Make sure that you're getting enough dairy to meet U.S. Department of Agriculture recommendations. It's a relatively small amount, just two to three cups per day -- and that can also mean servings of other dairy items and also calcium-fortified soy milk. That's why it's probably OK to…

6. Use less milk.
Once you've met your USDA-recommended dairy minimum, consider slacking off on milk as a beverage and drinking more water and also using less of other dairy products. Personally, I'll keep making yogurt no matter how expensive milk gets; with homemade jam or applesauce it tastes as good as ice cream. Besides, ice cream is going to cost more, too.

Readers:
How much milk do you buy per week? How will you shift your budget around to accommodate the doubling of dairy prices, if it comes to pass?

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