Archaic law could double price of milk
Milk prices could skyrocket if Congress doesn't extend the 2008 arm bill or write a new one to stall provisions from a 1949 law from taking effect.
Laws governing milk prices are set to expire December 31, and if nothing is done, the 1949 Agriculture Act would automatically kick forcing the government to buy dairy products at heavily inflated prices.
Those prices are based on a formula designed around dairy prices when it was produced by hand, and factoring in inflation and some complicated math, the USDA would be buying milk products at nearly double the current market rate.
U.S. Congressman-elect Steve Daines says its time to do something about the threat of 1949 law.
"Market conditions change, the dynamics of the [agriculture] community change, so I think there's a good reason why there should be changes made every five years to a farm bill, but when you revert back to a statue from 1949 that could in effect double the price for milk for consumers, that's insanity."
If the government is offering to pay farmers double what they can get from retail outlets, dairy farmers across the country will sell to the highest bidder, reducing available stock to make consumer products. This will create more demand for the supply, and drive prices up. Projections put a gallon of milk somewhere near $7.
"It's important that this gets addressed. It's yet one more fallout of the gridlock and the cliff that we face. They're now calling this the dairy cliff," says Daines.
So what would the government do with all that milk? According to the National Milk Producers Federation spokesman Chris Galen, the USDA would order cheese, butter and non-fat milk powder from dairy processors, since those products can be stored longer than drinkable milk.