Milk prices could double after 'dairy cliff'

An expiring farm bill will boost costs just as the nation's tastes change.

By Jason Notte Dec 24, 2012 1:30PM

Image: Woman holding a glass of milk (© Katri Lehtola/Folio Images/Getty Images)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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363Comments
Dec 29, 2012 12:31AM
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Farm subsidies are socialist  / communist / Marxist BS.  Any government interference in the free market by subsidies to " lower " or  prop prices, or sin taxes (most every tax is a sin) to raise prices, hinders development of more efficient means of production that keep prices lower overall.  Real conservatives know that.  I don't think there are any Democrats left in office left understand that, and lost of the Republicans speak as though they know but they clearly are just Democrats with less cash in their pockets and thus not as liberal. 

 

Here is the deal -

>no money in your pocket / bank account == liberal (govt to pay for it all, since when you have no money then money is no object - a pun that's figurative and literal)

>some money in your pocket / account == conservative (govt to keep hands off)

>a fair amount of money in your pocket / account == conservative (govt to keep hands off AND let business flourish)

>Lots of money in your pocket == liberal (as in every one else should be on an equal footing - except the rich liberals who need to keep their money so they can still jet about telling others why such others should be taxed more for the common good)

 

Where's Oprah when we need her?  She gave away cars on her show (well they are donated by Govt Motors so why doesn't she give all her money to the FED since that MUST be the place to spend it best?)   Ditto for POTUS Obama, Pelosi, Reid, Michael Moore, Georges Clooney and Soros, and all the other wacko libs. Despite all the whining about GOP, the Dems in power have gotten us so much further in debt than GWBush and the past 4 presidents combined - ala' ObamaCare and more union pandering.   So now we need to hit rock bottom to know which way is up.  God help us now - Romney would have slowed the inevitable but POTUS Obama is taking us there on the fast train to nowhere.  I can't believe less than half of those who voted were able to see BO is the Manchurian Candidate incarnate.   Boehner and GOP need to take the cliff message to the streets and let the Dems hang themselves.  Too bad the GOP is just as guilty for failure to address this issue, and merely less guilty for the amount of debt.

Dec 27, 2012 5:06PM
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This would make milk as expensive as it is in Hawaii, in 1993 a quart of milk cost almost $5 isn't it strange that the most expensive place to live is going to have the same prices as the continental 48 states, this is not cool at all.

The only thing to do is to Buy the cow!

Dec 27, 2012 12:43PM
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Go buy a dairy cow...she has to be fed YEAR round with corn that is $7.00 per bushel and a bunch of other expensive feedstuffs....at the present time, Dairy farmers are receiving $18.00 per hundredweight for their milk that is costing around $20.00 per hundredweight to produce.  The american consumers like some of the ones that have commented on this post should have to pay double for their food because they have no idea what goes into producing it and no appreciation for it when they eat it.  They will pay inflated prices for fuel and health care and all of their little idiosyncracies but up their food cost and they all whine like babies.  The farmers are the one group of Americans that are getting fed up with the rest of you that think your food comes from the supermarket and not the farm.
Dec 27, 2012 10:14AM
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Listened to MPR on the way home from work this morning.  At current, dairy producing organizations feel that the current farm bill is insufficient for them and hence actually want it to expire--independently of the fiscal cliff talks.

They have also stated that if the current bill DOES lapse, any price fluctuation would be months down the road, which means enough time to pass something more meaningful and have it in effect before pricing is affected.  Apparently the experts they spoke with disagree with the Chris Galen that makes statements in the above article.

Frankly, you've got more to fear from the weather than you do from congress, at least in the form of dairy.  Drought caused corn prices to skyrocket, which causes livestock farm cost to skyrocket, which means their goods will, you guessed it, skyrocket in price.  Mother nature still has more control over economics than congress and lately, works faster.

Dec 27, 2012 9:49AM
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Never take a job that creates debt.  That's a good one.  Maybe you are try that to Telenet to your Pres.  The man is put more debt on to this country than any other president in history.  He tucked that jobs we could add more debt to us and is going to have a lot more before it's over with because people like you think he's Christ.  Unbelievable.  Most people take jobs for one thing the pay their bills raise their kids in buy house is also hard to do those things without one.  It actually enjoy life if possible, but with this government.  That's not possible.  It's too intrusive this government has to be almost into my bathroom tell me how many sheets of toilet paper I can use the white my butt with I'm surprised it only committee for that you think this country is going do something great, not as long as these bees people are in charge.  I'm talking about you socialist liberals.  That's right, I said socialist.  That's exactly what you are.  Are we going go over the fiscal Cliff absolutely in some cases it might be good in most cases it won't be the only good case about it would be if we went over is it at least you liberals would have to get your spending under control you think you can spend yourself out of recession you can't it won't work and never has work and never will work.  You can't tax people out of one either.  What common sense tells you that what you're what this Pres. is doing will work nothing is just go make sure that your grandkids and your great grandkids and their great grandkids keep paying this debt back.  That's their future a very dim future.  Yes me!  So there's your answer to your job?  Get off the cloud you're sitting on and come back to earth and look at what's really happening.  That's your problem.  You only see what you want to see.  I see the truth.  Maybe are try looking outside your window one day, but then again you probably got a picture Pres. Obama in the window and it even talks to you.  This is don't worry, I'll make him pay.  Have a nice day
Dec 27, 2012 12:52AM
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Its just like gas we need it so you have to buy it. That's life got to have milk.
Dec 27, 2012 12:23AM
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The Media is having trouble spelling Greece..So we now have the "fiscal cliff." just uses. c,i,l and Fs.
Dec 27, 2012 12:00AM
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"Fiscal Cliff" ............Is that a new Jamaican Name for the US Citizen that is taking it up the A?? by the Dictatorship in power.

Dec 26, 2012 10:19PM
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newsflash: newscasters, not having a 2012 Apocalypse to talk about, now call everything a 'cliff', and believe that antiquated laws can't be repealed when they would cost both the government and consumers a needless amount of money with no benefit (except to dairy farmers). 
Dec 26, 2012 8:44PM
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Why does everything have to involve a "cliff"? I'm so f**king SICK of hearing about this so-called fiscal cliff, and now we have a sales cliff and a dairy cliff. Enough already!! As for the financial shape that we're in maybe the people who got us into this need to get us out, instead of crying about it.
Dec 26, 2012 7:34PM
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I live in dairy country and I see how the farmers are hurting. I wouldn't mind paying double for my milk if I knew it was all going to go into the farmers pocket, but I bet they don't see a dime.
Dec 26, 2012 7:30PM
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Hi, my son has a dairy farm. Will his income double? NO! So who gets this increase?
Dec 26, 2012 6:49PM
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I do think "GOT BILKED" is funny...Don't care who you are..../?/?
Dec 26, 2012 6:47PM
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We do have Farm subsidies to help Control prices, We are the BEST FED Nation in the World.

Some Farmers have a tough go of it, mostly due to Weather conditions, others due to disease or catastrophes.....And then a few because of mismanagement or lack of skills.

 

Most of the"cheap beef"has all came to Market,because of past droughts..Some/part herds were lost.

There are other options to drinking milk...For many....Usually not children.

I DON'T BELIEVE the $7 dollar/gal milk scare...

I guess much of the Farm Bill includes "food stamp program."??

I don't believe that Multi-million dollar Corporate farm functions, should get subsidies at the same type of percentage(%) levels.....If any ?? 

Dec 26, 2012 6:40PM
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GOT BILK? should be the american dairy farmers motto !
Dec 26, 2012 6:29PM
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The less milk in our fridges, the better off we are. It's not good for anybody. Why not.....NOT BUY IT? An excellent option.
Dec 26, 2012 5:55PM
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Farm Subsidies should be stopped immediately. Why do we have socialized Farming anyway?
Dec 26, 2012 5:45PM
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Its simple, stop drinking milk. It isn't good for us anyway.

Dec 26, 2012 5:45PM
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Idiots,, you don't have to buy high dollar milk, just let it stay on the shelves until it turns into cheese...the market must think we Have to buy there products at a higher buy ..it'll the price will come down when the product don't sell
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