If U.S. lawmakers can't renew or replace the farm bill within a few weeks, the price of milk — along with many other types of food — could abruptly travel 65 years back in time.
That might not sound so bad, since the average gallon of milk cost about 80 cents in 1949. But falling off the so-called "dairy cliff" would actually have the opposite effect: Because of antiquated federal price supports in the 1949 farm bill, reverting to its policies could cause U.S. milk prices to skyrocket, driving the cost of a gallon as high as $8.
If this sounds familiar, it's because Congress faced a similar scenario at the end of 2012. Lawmakers finally dodged last year's dairy cliff as part of a broader "fiscal cliff" deal, extending subsidies through Dec. 31, 2013, that are designed to maintain normal prices. And if that expires without anything to replace it, the U.S. government will be legally required to buy milk, cheese and other dairy products at up to twice the usual price, leaving little incentive for producers to continue selling to the public at lower prices.
The 1949 farm bill is "permanent law," and its archaic requirements are preserved in the background as a deterrent to legislative inaction. "I'm going to be put in a position where I have to invoke and implement permanent law. And I will do my job because that's what I swore an oath to do," U.S. Agriculture Secretary Tom Vilsack tells NPR. That possibility is normally "a great lever to compel action" from Congress, he adds. "In most cases, it's the reason why we've had fairly routine extensions of the farm bill for the past 50 years."
According to a report from the Congressional Research Service, "implementing permanent law could cost the government over $12 billion per year for dairy, and result in milk prices doubling." Dairy products would be the first affected for the 2014 crop year, the CRS adds, but as Patricia Murphy points out in the Daily Beast, it's a slippery slope from dairy cliff to "everything-you-eat cliff." Corn, rice, cereal grains and honey would all revert to 1949 price supports if the farm bill expires, depending on the timing of their harvest.
So what's the holdup in passing a new farm bill? The discord in Congress is mainly about the federal Supplemental Nutrition Assistance Program (SNAP), which funds food stamps and other nutrition assistance for millions of low-income Americans. SNAP is normally included in farm bills, but congressional disputes over its funding have recently threatened to detach it from the omnibus. House Republicans have offered a separate SNAP bill that would cut $40 billion from nutrition-assistance programs, while the Senate has maintained a unified farm bill that cuts about $4 billion from SNAP via anti-fraud measures.
Minnesota Rep. Collin Peterson, a Blue Dog Democrat and ranking member of the House Agriculture Committee, tells North Dakota's InForum that a deal could hit the House and Senate floors for a vote sometime in early January. It would need to be passed by the farm bill conference committee before receiving a full vote, but Peterson says — without offering specifics — the deal is "substantially closer to the Senate's" approach.
Any deal in January would obviously miss the Dec. 31 deadline, but experts say there's little chance of America careening over the dairy cliff or any other dietary ledges. The USDA can technically impose permanent law as early as Jan. 1 in the absence of a farm bill, but Vilsack has said he'll hold off as long as Congress takes on the issue when it returns from its winter break in 2014. And even if he did begin the process, it would likely take long enough to affect milk prices that Congress would still have time to intervene.
Plus, as Cornell University dairy economist Andy Novakovic tells Farm Journal magazine, milk prices would only rise if producers actually sell to the government. And while the inflated prices would make that tempting, the dairy industry won't ignore the trade-offs.
"If no manufacturer cares to sell to USDA, then there is no sale and no corresponding price effect," Novakovic says. "[Manufacturers] would likely think twice before shorting existing customers for the short-term high of selling to USDA in a program that no sane person could expect to continue for long."
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