Could milk hit $7 per gallon in 2014?

Congress is under pressure to pass a farm bill by Jan. 1. If it doesn't, subsidies for dairy commodities will expire.

By InvestorPlace Nov 26, 2013 5:36PM

Image: Bowl of Spilled Milk and Cereal (© David Arky/Corbis)By William White


The price of milk in the United States could hit the roof if Congress doesn't take action by year's end.


CNNMoney reports that if a farm bill isn't passed by Jan. 1, subsidies for dairy commodities will expire and milk prices will skyrocket, potentially leaving consumers to pay nearly $7 per gallon, or double the national average.


Milk isn't the only thing that could get more expensive, either. The expired subsidies will activate a 1940s formula that also could propel the prices of other goods, such as corn and soybeans.


Lawmakers are looking at the possibility of ending subsidies paid to farmers and replacing them with crop insurance programs that would keep prices steady even during a disaster. However, Republicans and Democrats said late last week that talks were on the rocks.


Also standing in the way of the farm bill is funding for food stamps. Congress previously had agreed upon food stamp cuts to be attached to this bill -- 3.8 million people to save $40 billion across 10 years. However, Democrats are now battling against these pullbacks following November's expiration of funds dedicated toward the SNAP food stamps program.


A Senate version of the bill would have have $4 billion being saved from food stamps to help end abuse of the program, CNN Money notes.


According to Dairy Reporter, milk consumption in the United States has dropped 25% since 1975. The reduction in milk consumption is expected to continue as Americans drink 28 ounces less of milk per person a year. This reduction isn't due to price, though, as milk prices have remained relativity low since 1975.


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257Comments
Nov 26, 2013 6:06PM
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Milk consumption dropped 25% since 1975?  Make the price $7/gallon and you'll see a heck of a larger drop in consumption.
Nov 26, 2013 6:35PM
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oh yeah i stopped buying it at 3:00 dollars a gallon, There is no reason  in the world for this kind of rippping off of americans.

It is certainly time for we the people to rid ourselfes of the thieves in washington and replace every last one of them with new people.

Term limits need to be inserted and any and all of their retirment needs to be at age 72, and it needs to be social security instead of the six digit retirment they all voted to give themselves after one term.

we need to insist on this by january first 2014.

obama needs to be the first incompetent liar, that has violated our constitution and its core on several occasions. to be replaced, then we go from there right down the line until we have a new senate, house, congress, etc. The lying criminals that are running the show now are nothing but a bunch  of law breaking morons that only create laws that protect them from the law itself.

Time for change is an understatment.

Nov 26, 2013 7:10PM
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Supply and demand. It may go to 7 dollars for a short time and people will stop drinking and price will drop down. Sorry, but we can start drinking water for a large part. I have three teenage sons and go thru about 4-6 gallons a week. If that happens they will be weaned or I will get a cow and they can start milking...
Nov 26, 2013 6:02PM
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End all those damn subsidies and you will see an increase is small business and a return buying local.
Nov 26, 2013 7:03PM
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Our government is so worthless. Cannot get anything done. When will people wake up and vote out all the incumbents.
Nov 26, 2013 6:20PM
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didnt we just go through this last year.........this is what you get when you put attachments on bills that have nothing to do with the main bill
Nov 26, 2013 6:45PM
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I was in the dairy business in the 1970's.  The price I got for a 100# of milk was not that much different than what the dairy farmers are getting now.  The difference is that the number of daries has significantly decreased because the overhead to produce a gallon of milk continued to grow and grow and grow until the smaller, family dairies could no longer afford to stay in production.  Secondly, the number of milk processers/cheese manufacturers also decreased.  The distance required to take milk from the dairy to processor to market has increased as well.  Add into the equitation the cost of trucking milk from producer to processor to market, given the significant increase in fuel for transporting has also gone through the roof.  What would be an equitable balance between producer and market is hard to say, given the number of variables involved.  However, for those who still drink milk and use dairy products, it is still a good consumer investment compared to the prices of bottled water, energy drinks, soda and alcoholic beverages.  It comes down to the preference of the consumer.


Nov 26, 2013 6:28PM
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It seams strange that we are always told it is supply and demand. End the subsidies and we will go back to smaller dairies and will have a much better product. Smaller dairies will fill the gap, So many quit because the processors would cut the price they paid for the milk  (butter fat) at the farm in the summer and told the farmers it was because it cost them less to produce due to the pasture was available. We need to cut all subsidizes, that is the main reason that good farm land is now going for as much as $10,000. an acre...  
Nov 26, 2013 6:10PM
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      DO   NOTHING  C O N G R E S S  THATS   WHAT  WE  HAVE  SHAME  ON  ALL  OF  THEM
Nov 26, 2013 6:23PM
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Let it end allow the market to function.  All these subsidies aimed at keeping prices low are also aimed at keeping wages low.
Nov 26, 2013 6:02PM
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WalMart milk here in Boise just dropped to $1.98 a gallon. It goes up to $7 a gallon and there will be problems like shotgun robberies of milk trucks. I'd line up with empty jugs and buy black market milk and I bet the farmers will be the ones driving the trucks to cut out the middle men, not man, men.
Nov 26, 2013 7:10PM
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If we were not wasting so much corn producing ethanol, milk prices would drop.
Nov 26, 2013 7:22PM
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I wouldn't mind milk/dairy prices going up if my taxes dropped from the subsidies ending. What are the chances of that?
Nov 26, 2013 7:16PM
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The farm subsidy issue is just another tactic of the government to create the illusion that the public is getting a benefit from the government - the farmer gets subsidized for producing so supposedly the consumer can purchase food at lower prices then the cost of production; the consumer is subsidized for consuming (food stamps, school lunch programs, etc.); and, large, special-interest groups can capitalize on the greed of their political puppets.  Its like a large pond(our economy).  You keep adding water to the pond to keep it full or expand it.  The government keeps taking your water out of the pool.  They also stir the water around in the pool to give the impression they are using it in a fashion that will also add water to the pool, when in reality they are wasting/spilling much of the water.  To make up for their waste/spillage, they then borrow water from their neighbors to try to keep their share of the pool filled.  Do you have any idea what happens to wasted/spilled water?  Well, neither does the government!!
Nov 26, 2013 6:24PM
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Charging $7/gal will just have Mexico importing and an increase in soy milk imports. Beef prices will take a temporary drop as farmers butcher their herds and we can have another food segment we are no long self sustaining. All this so the administration can push more people into food stamps and captive votes.
Nov 26, 2013 7:20PM
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My guess is that when milk hits $7.00, shortly after that cottage cheese will be cheap and the sewer will be full of milk.
Nov 26, 2013 6:01PM
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Got milk.  hehe

 

I couldn't resist.  =)

Nov 26, 2013 6:27PM
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Yes it certainly could, I wont be buying it though, so whats the big deal?
Nov 26, 2013 6:27PM
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Thank you Jimmy Carter for destroying the dairy herds and the democratic congress. Now we will pay again for the democrats trying to play businessman which they stink at.
Nov 26, 2013 7:48PM
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This is just the start. You ain't seen nothing yet.
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