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6 ways to survive the 'dairy cliff'

Milk could soon cost $7 a gallon if Congress doesn't fix an expiring dairy subsidy. These tactics will minimize the impact on your budget.

By Donna_Freedman Dec 27, 2012 11:57AM
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.

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?

More on MSN Money:

Dec 27, 2012 6:02PM

We shouldnt HAVE  to figure out a way to avoid the "Milk Cliff".   Milk, in my book, is a basic neccessity for families. Why do we have to go without the basics?  It's time our wonderful  federal Gov't get off it's  backsides and fix the crash before it happens.  They can't seem to do anything they are suppposed to !!!!  IDIOTS !!!!!

Dec 27, 2012 9:54PM
I was married to a dairy farmer for 10 years, we were not rich but we were not poor. If you want to know who makes all the money on this it is the middle man. The companies that make the cheese, milk, and other dairy products. They also hold out on the release of the products to make it run higher and seem like there is a shortage so they can make more money. This is just crazy, $7.00 a gallon??? This reminds me of Wall Street and their games. Such a sad game to play when it comes to a basic product that almost all Americans use. Pure greed.
Dec 27, 2012 7:26PM
If the price is going to go up because a subsidy expires, we're already paying more for milk anyway, we just don't realize it. Subsidies are made up of tax dollars- our tax dollars are artificially keeping the price of milk low. People who champion market economics don't champion subsidies. 
Dec 27, 2012 6:58PM
I will have to do without milk, cheese (which I always have used liberally) or any other dairies.   I am on S.S. and it certainly isn't making it in the last  6 to 8 months for me.   With prices going up on meats, cereals, and everything else I see, I just cannot stretch the budget at all.   As it is I am going to a food pantry once a month to cover the last 2  weeks before my check comes..    
Dec 27, 2012 10:33PM

The Grocer is the person that makes the most on milk, by far.  Current dairy subsidy amounts to basically a support price at $10 per hundred weight.  Current price of milk is $18.78 per hundred weight, so dairy farmers are not getting any help at this price.  The farm bill is made up of 80% food stamp policies.  That is why nothing has been done. 

    Basically, the retroactive bill is a 1949 bill that pays dairy farms the minimum amount to stay in business.  Add inflation to the formula, and you get $38+ per hundred weight support.  Nobody in the dairy business wants this.  Sure, very short term gain is high but dumping milk down the drain due to no demand would be bankrupts.  Congress needs to get off their butts!

Dec 27, 2012 6:47PM
Looks like we may all have a good cry over spilled milk at $7 or more a gallon!!!
Dec 27, 2012 6:11PM
Don't know what planet this writer is from, but the longest I have had milk last past the expiration date ways a week, and that was measuring it out and putting it right back in the fridge.
Dec 27, 2012 8:05PM
Double milk, cheese, and dairy products means I will buy and consume much less if any at all. That will hurt the farmers and the economy. Let's,'s see if the excuse for a government can do anything to do what is good for the people, instead of their rich campaign contributors. I'm not going to hold my breath.
Dec 27, 2012 8:47PM
Dec 27, 2012 1:02PM

I keep powdered milk on hand.  Most groceries will be going up.  I have been stockpiling as many near free grocery items I could get, even if I don't eat the stuff, I may have to one day!

Dec 27, 2012 7:26PM

I didn't vote for this President. Now you see what you asked for. Obama will decide what you eat and feed your family.


Dec 27, 2012 7:05PM

I grew up on mixing powdered milk with whole milk and real butter was a treat only at. thanksgiving. Never knew what leftovers were until my siblings started leaving home with mom & dad not quite figuring out how to downsize menus enoiugh. Looks like many of us may  have to revisit old habits. Since the kids have all left, milk and butter consumption is down.


Like the article says, buy on sale and freeze.

Dec 28, 2012 8:55AM
There is no reason for the government to subsidize any thing. If $8.00  is what it costs then that is the market value. Why should I pay higher taxes so milk is cheaper. I pay either way and receive no benefit. GET the government out of the process and let goods find their own price.
Dec 27, 2012 7:00PM
Hey; Switch to Beer,tastes better,an never goe's sour!
Dec 27, 2012 10:47PM
Unopened brick/chunk style cheese will last for years (just get sharper).  May have to cut off any surface mold.
Dec 27, 2012 9:29PM
Milk is my favorite drink and will buy it regardless of the cost.  I live in a Diary farm area and the farmers have been suffering with low prices at the farm level for the last 3 years. Several have gone bankrupt and some even committed suicide.   The Farm bill would equalize the cost of milk at the farm level around the country and save jobs and keep milk prices to the consumer fair.  
Dec 27, 2012 10:41PM
Cheese in all forms can be frozen for up to 3 months without a decrease in taste and quality. 
Dec 27, 2012 6:02PM
Dec 27, 2012 6:20PM

Isn't baby formula milk based? I guess that would go up in price as well. Sounds like another way to get people on the dole. How could you not, if you can't afford formula for your baby.

Dec 28, 2012 3:21AM
its not just milk that will increase it will be other comodities too (corn, soy beaens, wheat ect) I milk cows for a living and the price of milk has been on the low side to long.Milk in my area is 4.45 a gallon thats 51.13 per 100 pound I'm being paid 23.50 per hundred thats less then half (the middle man makes more than I do) In the last two years my feed costs have more than doubled, fuel cost have increased 40%, inputs to plant crops have increased 60%. In my neighborhood 10 years ago there were 15 farms now there are 5 because the current prices don't cover cost. I agree $7 is too much a gallon but prices do need to increase. I work 7 days a week average 13 hours a day no holiday pay no over time I have to pay my own health insurance but I like what I do.Because of prices not covering costs family farms are selling out because the younger generation not taking over, eventually enough farms go out and we'll be importing milk from china like everything else an we all know the quality products they sell us (remember the lead scare, the malonine tainted milk scare). The goverment should regulate gas, insurances,taxes like they regulate milk.
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Donna Freedman's Frugal Nation blog is for readers who want to live cheaply -- whether due to necessity or a lifestyle choice. It explores living sustainably and making life more meaningful at the same time.


Donna Freedman

Donna Freedman, a writer based in Anchorage, Alaska, writes the Frugal Nation blog for MSN Money. She won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. Donna also writes about the frugal life for her own site, Surviving and Thriving.