Got Milk? It Could Cost $8 a Gallon

Congress is so focused on the fiscal cliff, the farm bill has yet to be renewed.

Come Jan. 1, there is a threat that milk prices could rise to $6 to $8 a gallon if Congress does not pass a new farm bill that amends farm policy dating back to the Truman presidency, reported the New York Times.

On average, a gallon of milk costs $3.65, according to the dairy industry. However, that could change if Congress does not renew the farm bill by Monday and the milk-price formula reverts back to 1949, reported CBS Boston.

U.S. Agriculture Secretary Tom Vilsack said without a farm bill renewal, farmers will be in a hurry to sell to the government, creating a shortage in the stores. It is estimated the price of milk could go as high as $8, he told the Capital Press.

If the farm bill is not renewed the government will be forced to buy milk at inflated prices, driving up the cost for everyone.

As customers demand milk, markets would look to higher-priced overseas milk producers to make up the shortage, and prices could go up on everything from butter to yogurt to cheese.

Eventually, the government would sell off the milk surplus that it had built up, causing milk prices to plummet.

In the short term, consumers would be devastated and dairy producers would have a payday, after which consumers would get a break while dairy producers watch their profits crash and burn.

Action on the farm bill this year was stalled by disagreements over the food stamp program, from which some conservative members of the House of Representatives wanted deep cuts, reported the Capital Press.

The National Milk Producers Federation and other farm groups had hoped a farm bill would be part of a final “fiscal cliff” budget package passed before Jan. 1.

Things I Learned January 01, 2013 at 03:07 PM
Hey remember when agribusiness and government interfered with the free market and created a system of perverse incentives so now farmers can make guaranteed sales to the government and jack prices up and people are so stupid they won't seek substitute goods so the sky's the limit hey didn't they prosecute people for this after Sooooooperstorm Sandy and then the government will hoard the milk until it either goes bad or they can dump it on the market all at once instead of slowly releasing it to maintain market stability because government I do it sure is a good thing government is taking over health care now nothing can go wrong.
Vincent Wallgren, Jr. January 02, 2013 at 03:43 PM
Such are the consequences of regulated markets. I can almost see the execs at ConAgra and Archer Daniels Midland giddy at the prospect of windfall profits.


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