The "dairy cliff" has been avoided.
A deal approved by the U.S. Congress late on Tuesday to avoid the automatic tax hikes and spending cuts known as the "fiscal cliff" also included measures to avert the dairy cliff, which could have led to a steep increase in the price of milk. The tax agreement contains a nine-month farm subsidy program, which gives lawmakers more time to come up with a new five-year replacement.
If the farm law would have expired, dairy subsidies would have reverted to 1949 levels. If this would have happened, retail milk prices could have doubled to more than $6 a gallon in coming weeks or months. Lawmakers have, so far, failed to finalize a new $500 billion, five-year Farm Bill to replace the 2008 legislation, which authorizes spending on food stamps and crop subsidies.
Sen. Charles Schumer, D-N.Y., speaks at the Capitol recently.
Last month, U.S. Sen. Charles Schumer, D-N.Y., urged the U.S. House of Representatives to take action on renewing the Farm Bill by Jan. 1 to avoid the dairy cliff. The bill had already been approved by the Senate by a 64 to 35 vote in July.
"I am pleased that the year-end fiscal cliff deal includes a provision to avoid the 'dairy cliff,' which would have meant chaos for family farmers and sticker shock throughout New York's supermarkets, with the doubling of milk prices," Schumer said. "For months, I have urged the House of Representatives to pass the Senate's bipartisan five-year farm bill, and while the extension of the 2008 Farm Bill is far from perfect, it avoids an unnecessary burden on families, schools and farmers alike."
Schumer said the extension will also include "safety net" programs critical to dairy farmers throughout Upstate New York. While Schumer expressed his disappointment that the House did not passed the five-year 2012 legislation, which included many important reforms, he said avoiding a dramatic spike in milk prices would have been devastating to consumers across the state and the country.
Rep. Tom Reed, R-Corning, also expressed the need for a long-term extension.
"Talks need to continue," Reed said. "We need to take what we have learned and come up with a bill that has high hopes, possibly for five years, for our agricultural community."
Prior to the farm bill extension, Aron Crowell, Chautauqua County Farm Bureau president, said the heart of Chautauqua County's agriculture is dairy farms. He said the farm bill not being renewed is something that is implausible.
"There is a real fear right now that there is no safety net," he said at the time. "In the end, without the passing of the farm bill, we will see a number of things occur, some of which are almost unthinkable that they could happen."
Crowell said farmers now are getting around $20 per hundred pounds of milk production. A hundred pounds of milk production from a dairy farm equals about 9 gallons of milk in the store.
Crowell said if the farm bill was not passed or renewed, the price per hundred pounds of milk would at least increase to more than $30 and, more likely, be closer to $40.
"The impact is that the price of milk will almost double, and we will see some crazy fluctuations in the price," he said.