The five-year farm bill will expire at the end of December. It's the dairy industry's fiscal cliff. It worries many who are making a living from milk.
"In essence on the dairy side you would go back to a 1940s pricing regulation called parity pricing and it looks at the prices for feed or the animals and then take 75 percent of that cost, so it's like how much did it cost to make milk 75 percent to that would be the price paid to farmers," Vt. Deputy Agriculture Secretary Diane Bothfeld said.
Currently farmers are being paid about $20 per hundredweight for their milk. If there is no farm bill, that price could go up to $38 per hundredweight. That might sound like good news for dairy farmers. In the short term they would be paid more for their milk. But it could have a downside for those who buy milk to make yogurt, cheese and butter. And the price for products made from milk like cheese would also go up, which would have a negative impact on Vermont's specialty cheese business, a business the state has worked hard to promote. Some cheesemakers may decide not to make cheese if they are not certain they can sell it for a profit after it ages, because by then, milk prices could be back down. And that is the big concern-- that the uncertainty in the marketplace will disrupt the pattern of where milk gets marketed and what products get made.
"We really want that farm bill passed, that is the answer number one. If it is not passed, the effect won't be immediate come Jan 1. If it is still not passed by March or April we are definitely going to see some of this disruption happening. Prices will probably rise for farmers, but the market will get very chaotic on where milk gets sold to," Bothfeld said.
Which is why agriculture officials are keeping their fingers crossed that Congress will vote soon on a new farm bill.
Once again, Bothfeld says prices won't spike on Jan. 1. It will probably take three to four months before we see milk prices going up at the store, if there is not a new farm bill by then.
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