WASHINGTON Dec 21 Alarm about an arcane
provision that could send U.S. milk prices at the grocery store
soaring, hurting millions of American households, has spurred
calls for last-minute action on farm legislation that has been
languishing for months.
Congressional negotiators on a new five-year farm bill are
deadlocked on the size of potential cuts in food stamps for the
poor, the largest U.S. anti-hunger program, and on reductions in
crop subsidies to farmers.
But it is the dairy element, and the threat of retail milk
prices jumping to $6 or $8 a gallon from the current average of
closer to $3.60, that has triggered urgent calls for action.
"The nation, including Vermont dairy farmers, incredibly
enough now are on the verge of plunging over the dairy cliff,"
Democratic Senator Patrick Leahy, from the New England state
known for its cheese and ice cream production, said on Friday.
Without legislative action by year-end, U.S. farm policy
would revert on Jan. 1 to the provisions of the last "permanent"
farm bill, the Agriculture Act of 1949.
Under that Truman-era legislation the government would be
bound to offer so-called "parity pricing" for fluid milk that,
once adjusted for inflation, would be far above current levels.
Although that seems like a windfall for the 65,000 dairy
farmers in the United States, it would likely trigger a chain
reaction in which milk was sold to the government rather than
into their typical marketing chains, pushing down marketed
supplies and pushing up prices to consumers.
At some point milk distributors and dairy users, including
manufacturers of butter, cheese, yogurt and other products,
could replace domestic supplies with imports from countries like
Leahy conjured an image of USDA officials "dusting off old
paper files and mimeographed notes from the 1940s" to prepare to
turn back the policy clock.
"Whatever we are legally obligated to do, we will do," USDA
Secretary Tom Vilsack said this week.
"The best outcome would be for Congress to do its job, in
the remaining time of this year, to pass a five-year bill. And
to make it a priority. The worst outcome would be for us to
continue to see Congress do nothing, and for permanent law to
come into effect," Vilsack said.
The Senate passed a new five-year farm bill in June, and the
House Agriculture Committee passed a version in July, which has
not made it to a vote by the full House. The previous farm bill
expired Sept. 30.
Senator Debbie Stabenow, Senate Agriculture Committee
chairwoman, lashed out at Republicans in the House of
Representatives for inaction.
"Fiscal cliff tax increases would hit middle class families'
pocketbooks, but so would paying six or seven dollars for a
gallon of milk," Stabenow said in an emailed statement.
House Speaker John Boehner has said he does not want a
"1,000 page farm bill" bundled into any proposed solution to the
fiscal cliff, a round of automatic spending cuts and tax hikes
that could kick in after Jan. 1.
"We need to tell the speaker that it's not a thousand-page
bill. It's a bill that can be easily linked to, and provide
savings for, any fiscal cliff solution," Vilsack said.
A one-year extension of the current, expired farm bill would
be another option, albeit one that Vilsack has said he does not
support. Stop-gap legislation specifically aimed at the dairy
provisions would be another option.
TAXPAYERS TO BE MILKED
Adding dairy insult to injury, economists at USDA estimate
that the implementation of permanent law for dairy would cost at
least $12 billion to $15 billion a year.
By contrast, the Senate version of the farm bill would save
an estimated $23 billion over five years, and the stalled House
version some $35 billion.
Chris Galen, spokesman for the trade group National Milk
Producers Federation, said that dairy farmers have been pleading
with Washington to deal with the lack of a farm bill.
Absent a bill, "prices will go up dramatically on milk,
cheese, butter and milk powder - and they're not sustainable
prices. It might be good for farmers in the short run, but it's
going to be bad for everyone in the long-term," Galen said.
But Kathy Ozer of the National Family Farm Coalition said
that "parity pricing" by itself would not produce the kinds of
milk price spikes being foreshadowed.
"We argue that it's the processors and those in the middle
of the [supply chain] that would be driving up the prices for
the consumers and taking the massive profits - not the farmers,"
said Ozer, executive director of the group, which represents
small farms and rural groups.