The Tribune Democrat, Johnstown, PA

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December 28, 2012

Milk prices could skyrocket with lack of farm bill

JOHNSTOWN — Think the family grocery bill is already through the roof?

Brace yourself.

If the U.S. House of Representatives fails to act within the next few days, the price of a gallon of milk could soon increase in Pennsylvania by an estimated 68 percent.

Failure to pass the farm bill will within weeks force a spike in dairy prices with the primary product, a gallon of whole, vitamin D milk, jumping from the current $4.10 to $6.86, Pennsylvania Sen. Bob Casey said Friday.

Casey took his concern over the lack of a farm bill to reporters in a teleconference urging the House to pass the legislation when it comes back into session Sunday.

The Senate approved the bill, a massive piece of legislation that must be renewed every five years, in the summer. It has since languished in the House, he said.

 Similar increases will be seen in the price of all milk grades, cheese, ice cream, yogurt – everything made from milk.

“If the House doesn’t take action, we revert to the 1940s law that could force milk prices to skyrocket,” Casey said.

The farm bill is the basic agricultural and food policy law for the nation. It is the generator for the U.S. Department of Agriculture and for the past four decades has addressed commodity programs, ag research, food and nutrition programs and a host of other farm-related interests.

Critics of the House’s failure to pass the bill say it will force dairy prices to be based on inflation rates rather than price controls, which have been in place since 1949, Casey said.

The greatest impact will be on the retail price of milk at the consumer level. That increase would be felt in early 2013, said Casey, chairman of the Joint Economic Committee.

Along with the near immediate impact to the consumer, he said, the lack of a farm bill will force the federal government to spend an estimated $12 million to

$15 million to buy up excess milk under an antiquated system.

The farm bill provides a minimum price aimed at covering the costs of farmers and processors with a guarantee to buy the milk at that price. Producers can usually do better selling on the consumer market, according to information provided by Casey’s office.

“Dairy is the first commodity that will revert to the old price parity law on Jan. 1,” Casey said. “Under the provision, the U.S. Department of Agriculture would be legally required to buy up milk.”

The increased cost  likely will result in decreased demand and hurt producers, he said.

Also likely to hurt farmers will be the skyrocketing cost of grain to feed their cattle, a likely increase without a farm bill and its safeguards in place, Casey said.

The Pennsylvania Farm Bureau joined Casey in his call for action by the House, calling the farm bill long overdue.

“It is our understanding that, should there fail to be a farm bill, the U.S. secretary of agriculture would have to write regulations to implement the provisions of the 1949 act,” Farm Bureau spokeswoman Kristina Watson said.

“As a result, it is not certain that changes would happen immediately. However, markets could be impacted as a result of the uncertainty.”

The hope is that an agreement can be reached by the House, Senate and the president in the immediate future to avoid the fiscal cliff, she said, and that a one-year extension of the farm bill will be included in that legislation.

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