Image: Bowl of Spilled Milk and Cereal (© David Arky-Corbis)
Remember during the last Bush administration when the Department of Homeland Security would trot out its color-coded Advisory System threat meter and get folks all riled up no matter how grave or trivial the justification?

Well, we're back to that again, only perceived threats to national security have been replaced by perceived threats to the cost of milk.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.

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