Milk prices at stake in farm bill fight
A dairy provision in new agriculture legislation designed to aid providers is being compared to 'Soviet-style' communism.
Well, we're back to that again, only perceived threats to national security have been replaced by perceived threats to the cost of milk. Consider the nation's milk price threat level somewhere above "skim" and below "2%."
After averting a dairy cliff earlier this year that could have doubled milk prices if lawmakers didn't extend the agriculture bill that expired last summer, Congress is caught up in milk controversy yet again as it considers a new farm bill. The legislation includes a dairy provision that would nix current price supports and allow farmers to buy insurance that pays when their milk profits fall.
The program is voluntary, but farmers who participate would have to agree to a stabilization program that could dictate production cuts when oversupply drives down prices. The dairy plan, written by Democratic Rep. Collin Peterson of Minnesota, is designed to break the cycle in which milk prices drop and farmers produce more to pay their bills, flooding the market and forcing prices down further.
Peterson says the stabilization program would prevent a recurrence of what happened in 2009, when many dairy producers went out of business after they were hit hard by a combination of low milk prices and high feed costs. Republican House Majority Leader John Boehner, however, compared that fix to "Soviet-style" communism and is backing an amendment to scale it back by keeping the insurance but dropping the stabilization requirement.
That doesn't sit well with the National Milk Producers Federation, the largest U.S. dairy producer organization, which worked with Peterson on the amendment and has lobbied members to back it. However, Boehner is joined in his disdain for the measure by the International Dairy Foods Association, which represents the milk, cheese and ice cream industries and other food processors and manufacturers that use dairy products. Those dairy processors say that the stabilization program would drive up the prices they pay for dairy products and that those costs would be passed on to consumers.
Politicians in dairy states note that if Boehner gets his way it'll unnecessarily anger representatives from those states and sway them against future farm legislation, upsetting the delicate balance of regional interest that has previously ushered farm bills through. The Senate, however, sided with Peterson and passed its version of the farm bill with the new dairy program intact.
The danger to both sides is the hundreds of House members in urban and suburban districts with just about no knowledge of the dairy industry other than milk prices. Not surprisingly, each side has preyed upon that relative ignorance by using milk prices as a wedge. Hence the dairy cliff and a complicated agriculture bill boiled down to a milky reduction.
This is just another example of government fiddling with the market to suit special groups and to help politicians in certain states get re-elected. The government needs to get out of the business of business and let market forces determine prices and production.
I remember when they bought my Uncle and his Milk herd out maybe 20 years ago or so...
It was a good time for him to retire and get some walking money to boot...
The Herd had to go to slaughter for cutters and canners or utility beef, (bottom grade.)
The younger kid up the road a few miles, just brought more young heifers on line, to make up for the shortfall in a matter of a few months.
Yup, Once again, "Mission Accomplished" by our unknowing, all-knowing Government.
When milk prices go up, you don't have the number in farmers waiting on the sidelines to produce more milk. A cow is limited and it takes a while to get the Springers on line. Prices most likely stay up for the consumers for a long time. Farmers lose out waiting for cows to come on line which can be too late for their benefit depending where on the curve they are. The early bird gets the increase.
When the prices go down, the same type situation occurs with only a couple of options, one is to kill cows to reduce the amount of milk but also the farmer's paycheck. The other is to produce as if the price is up and bring more cows online when available to get a bigger pay check, which will further flood the market and reduce the prices.
Farmers are normally stuck due to the nature of the business. That is why the Feds normally have bought dairy products to store for emergencies. With all the Trillions in money that is being thrown about, one would think there would be some for the people that feed most of us.
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
A basic income policy can actually ensure a decent standard of living for everyone.
- People left $500,000 in coins at airports last year
- How your driving can affect your credit
- Obamacare projected to cost hundreds of billions less
- November jobs report: Winners and losers
- Student loan debt climbs for 5th year in a row
- Wall Street finally notices Bitcoin
- Part-time workers hurt by on-call system
- 5 myths about late payments and your FICO scores
- Auto loan interest rates hit record low
[BRIEFING.COM] A solid November employment report translated into a solid day of gains for the major averages. While there was some talk that the encouraging job growth raised the odds of the Fed announcing a tapering at its December meeting, the message of the markets today was either that it didn't believe there would be a tapering this month or that it doesn't fear a tapering this month.
It was just one day, yet there was ample meaning wrapped up in the connection that the 10-yr ... More
More Market News
The Fed may start tapering in just a few months. Here are a few of the likely winners and losers.