Milk prices could double after 'dairy cliff'
An expiring farm bill will boost costs just as the nation's tastes change.
Amid a holiday season filled with gun violence, Superstorm Sandy fallout and fiscal cliff worries, even seasonal American creature comforts like a short stack of cookies and a tall glass of milk are laden with worry.
Dunk those snowman-shaped sugar cookies at your own risk and ration Santa's to-go glass, because milk is going to get a whole lot costlier if congressional inaction continues.
The current agriculture bill expired this summer, and temporary aid to farmers is set to expire on Jan. 1. That includes a dairy subsidy that allows the government to buy up milk if prices below half of the $3.65 national average. Without that plan in place, the per-gallon price will jump to roughly $7.
New York Sen. Chuck Schumer brought up the issue during a news conference in September, according to CBS News. He warned that milk prices could double for consumers already putting nearly 11% of their grocery budget toward dairy products, according to the Bureau of Labor Statistics.
The problem is that the vacuum left by the agriculture bill's absence would be filled by a statute dating back to 1949. Under those terms, the government would have to buy back milk at double current prices, which would increase costs across the board for companies like Kraft (KRFT), Hershey (HSY) and any other that uses large quantities of milk.
"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 told CNN's Candy Crowley in an interview for “State of the Union” slated to air Sunday. “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. And that's going to ripple throughout all of the commodities if this thing goes on for an extended period of time.”
That's not exactly great news for the dairy industry, either. Milk prices were already up after the summer drought stifled milk production and grain prices increased, but Department of Agriculture numbers already show a 30% decline in milk consumption since 1975. It's dropped 3.3% already 2012 from 2011, the biggest decline since 1975.
As much as the dairy industry may want to pin losses on alternatives like soy and almond milk, sales of all types of liquid milk has fallen 2.9% by volume since 2011 as total dollar sales have slipped 2.2%, according to market-research firm SymphonyIRI Group. However, the dairy industry is taking a huge hit as sales of skim and low-fat milk have dropped 4% by volume.
Chris Galen, a spokesman for the National Milk Producers Federation, which represents over 30,000 dairy farmers, told CNN that the looming price hike is a “dairy cliff” that could forces manufacturers to consider dairy imports or alternatives. Though the price hikes would take a few weeks to hit supermarkets, continued Congressional inactivity would ensure a spike if the current farm bill isn't extended or a new farm bill isn't implemented.
Considering Congress is home for the holiday slugging back as much milk as consumers are, Americans may want to savor a relatively cheap sip or two while it can.
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More horsehockey. Agricultural subsides are PRICE subsidies, to keep the prices UP, they don't keep prices DOWN! He says it himself: "...a dairy subsidy that allows the government to buy up milk if prices go below half of the $3.65 national average".
This is nothing but "corporate welfare" and has been since after WWII. All corporate welfare should be eradicated. If milk prices go up, two things would happen: people would drink even less, and farmers would produce even more. Then the price would stabilize normally, without government payouts.
Let the subsidies (AKA corporate welfare) expire!
Why are my taxes used to pay the dairy industry?
OH NO !!!
Do you mean to tell me that we might have to return to what is called a "Free Market" to determine the price of milk.
What kind of capitalism is that-where supply and demand determine the value of a commodity.
If this type of thing succeded the next idea might be that we don't need the government to meddle in every facet of our lives.
What the city folks do not understand is that the farm bills are ment to stabalize the cost of food! the trouble with the country is that more people live in and grew up in the city. If a farmer has a bad year he could go out of business. The democrats say good but what you city people do not understand is that it takes years to build a dairy herd up. years likd this one with the droubt alot of farmers could go out of business. If the dairy industry starts to go out then those jobs will go to countries that are friendly to business, and as we all know president Obama is NOT business friendly.
Because the socalist do not understand the "work" conscept as well as the small business man. You think a dairy farm is a one man job? on the contrary cows are milk 24 hours a day plus feeding time, hay bailing in the summer and grain production (planting and harvesting) is a lot of work!!!
Well you were warned about the Obama and the socalist party, As Obama keeps spending money we do not have the value of the dollar keeps going down meaning it cost more for everything. This cannot be allowed to keep happening!! Wake up and realize what it takes to produce your food and what it will cost if subsidies are cut.
If you think $7 milk is bad wait untill it hits all dairy , Cheese, Icecream, Vitiams ect. everything will go up and up and up!
Lastley who does this hurt the most? The POOR the RETIRED and the MIDDLE CLASS!!
Obama talks about fair but this is what the reality of fairness is !!! More jobs exported and wait untill Every employer has to supply his workers with health insurance. Higher prices to cover the additional expence and fewer jobs created in the US. More imports and our money being redistributed to the rest of the world!!!
When an Republican is office everything is cheaper, but when a DEMOCRAT is in office everything is tippled.
This is what my grandfather had always told me. Guess what he was right.
With all the EAP and government regulations, high cost of equipment, insurances, labor, plus the high cost of doing business in this not so business friendly democrat state of washington. It's a wonder the dairies are still in business.
Wow everithyng is going up I can't believe all prices on food is no like before
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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