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“Dairy cliff” bringing $7 gallon of milk may be avoided

This news story was published on December 31, 2012.
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milk gallonWASHINGTON, D.C. – A bill in the House of Representatives may be voted on within the next day or so to help avoid what is being called a “dairy cliff” that could bring with it milk prices of up to $7 per gallon or more.

Secretary of Agriculture Tom Vilsack has said that because no farm bill has been passed by Congress, the resulting higher prices for milk would be passed on to consumers.  It was reported Monday that House and Senate Agriculture committees have agreed to a one-year extension of the 2008 farm bill but a vote may not be allowed.

“Consumers, when they go in the grocery store, are going to be a bit shocked when instead of seeing $3.60 a gallon for milk, they see $7 a gallon for milk,” Vilsack said in an interview with CNN (see video below.)

NBC has reported that without a new bill “or an extension of current law, milk prices would revert to rules set in 1949, the last ‘permanent’ farm legislation in the United States. Government price supports would kick in, based on production costs 64 years ago, plus inflation. The potential retail milk price has been estimated at $6.00 to $8.00 a gallon versus current levels near $3.50.”

The bill in the House that is awaiting a vote would be a one year extension of the current law.

If the bill is not passed, NBC reported that “the price of milk will not double on Jan. 1, if Congress fails to act. Instead, prices would rise gradually as supplies are removed from normal markets and land instead in U.S. Department of Agriculture storage facilities.”

VIDEO: Agriculture Secy. Tom Vilsack: milk could hit $7/gallon


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5 Responses to “Dairy cliff” bringing $7 gallon of milk may be avoided

  1. Avatar

    Katie Reply Report comment

    January 2, 2013 at 12:47 pm

    Have you forgotten the farm crisis of the early 80’s? It happened because banks lent money against inflated land values. Farmers may be rich on paper now, but banks aren’t going to make the mistake of lending money against inflated land values again. I don’t know how subsidies work on paper, but there should be some sort of proof of need in order to qualify. Small individual farmers likely need them more than big farm corporations.

    • Avatar

      LVS Reply Report comment

      January 2, 2013 at 2:47 pm

      @Katie-I think there is a big difference between a subsidy and a loan. If the government want to make loans to farmers such as they do for homes that is OK. A subsidy to me is a give away and I don’t think they separate the real farmers from the banks and investors. They should be required to prove that they are actually farming the land and are not just landowners that are renting the land and then getting a subsidy for farming. It is one thing to help people that need it. It is something else to give money to rip off artise.

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    LVS Reply Report comment

    January 1, 2013 at 12:37 pm

    I don’t think it is quite that simple, but I agree with you. Why should we (taxpayers) subsidize millionairs?

  3. Avatar

    Anonymouse Reply Report comment

    January 1, 2013 at 12:15 pm

    We could just stop subsidizing farmers.

    I don’t get free money to do or not do stuff, why should they?

    • Avatar

      Econ 101 Reply Report comment

      January 2, 2013 at 10:44 am

      To stabilize the worlds food supply? Because if farmers go out of business one year because they do not get aid, they will not be back the next year causing demand to grow and supply to weaken thus causing prices to rise dramatically? Just guessing here.