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Milk and Dairy Prices Set to Rise as Farm Bill Expires

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The farm bill expired today, reverting some programs back to a 1949 level and totally eliminating others. The other day I looked at the consequences of expiration, and while many elements didn’t have much of an impact until the end of the year, in particular milk and dairy farmers were likely to feel the pinch right away. And Democrats, in blaming the House GOP for not taking up their version of the farm bill, have wasted no time highlighting that.

Sen. Charles Schumer says milk prices in stores across New York could double if the Farm Bill isn’t renewed.

Schumer says the nation will start to revert to 1940s era agriculture policy if a new Farm Bill isn’t passed soon. The National Milk Producers Federation says government purchases of dairy products under the outdated law could cause milk prices to rise above $6 per gallon.

My understanding is that the farm bill that expires in 2012 still covers all crops or commodities planted and harvested in 2012. But dairy farmers have other issues, in particular the loss of the Milk Income Loss Contract Program, which supports them. That will hit farmers in November in their checks from the government. And dairy and livestock farmers already felt the worst effects of the drought, as the price of their feed skyrocketed. Dairy farms are going broke, particularly in California, due to a separate milk pricing issue. So while I don’t know whether prices would double right away, milk prices are almost certain to rise immediately.

House Minority Leader Nancy Pelosi jumped on the expiration of the farm bill, demanding in an emailed statement that House Republicans return to work to tackle it. She followed on Schumer by saying that “American families can expect their food prices to increase due to Congressional inaction, starting with milk, beef, poultry, and cheese.” She also correctly identified the inability for farmers to plan their crop rotations for the future with the spectre of returning to the 1949 prices for government purchase in 2013. Plus, disaster assistance programs have expired at the worst possible time. “The time for the House to act is now, without further delay, to aid the drought-stricken areas from coast to coast and support our nation’s farm community,” Pelosi said.

It was always clear that Senate Agriculture Committee chair Debbie Stabenow would wield the farm bill, which passed the Senate in a bipartisan fashion, as a political weapon in the fall campaign. But that avenue is open to a lot of Democrats, especially those in states and districts with a lot of dairy farmers. And anyone that consumes milk or cheese might want to know why their prices are going up, too.

UPDATE: The biggest race where this will come into play is in North Dakota, where Democrat Heidi Heitkamp is pressing the advantage against Republican (and current Congressman) Rick Berg.

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David Dayen

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