* House, Senate Republican leaders oppose farm plan
* Slender hope for Congress to avoid milk price surge
* Gov't will brake the 'milk price escalator'-Analyst
WASHINGTON, Dec 31 Republican leaders in the
U.S. House of Representatives and Senate refused to go along
with a farm-state plan to avert the "dairy cliff" on Monday, the
last day to act before retail milk prices may begin climbing
toward $7 a gallon.
Meanwhile some dairy processors said the plan hatched by
farm-state lawmakers over the weekend for a farm bill extension
would itself lead to higher dairy prices. They said the idea
ought to be dropped and Congress be given a new chance to write
a farm bill in the months ahead.
Without last-minute legislative action, the U.S. dairy
subsidy program will be run beginning on Tuesday under an
out-dated 1949 law that would roughly double current dairy
prices. The Truman-era statute takes effect when Congress fails
to write a new farm bill on time. The 2008 farm law expired
three months ago.
To avoid higher dairy prices, leaders of the House and
Senate Agriculture Committees proposed to extend key elements of
the 2008 law through Sept. 30, 2013, and to create a new dairy
program as part of it. The new program would compensate farmers
when milk prices are low and feed prices are high.
A spokesman for House Speaker John Boehner was noncommittal
if or when a vote would be called on the proposed extension.
Monday evening the House adjourned until noon ET on Jan. 1
without considering farm law. A farm lobbyist said Boehner
opposed the new dairy program because it would require farmers
to reduce milk output if prices were too low.
Senate Republican Leader Mitch McConnell opposed the new
dairy program as well and worked to keep it out of last-minute
bills, a Senate staff worker told Reuters. In its place,
McConnell suggested lower-cost versions of the current dairy
Leaders of the House and Senate agriculture committees hoped
to include the farm-law extension in an overall package on
deficit reduction. House Republican leaders countered with two
alternatives - a one-month extension of the 2008 law or a
one-month suspension of the dairy provisions of the 1949 law.
Although the so-called "permanent law" sets dairy supports
at high levels, two analysts said its impact would be gradual,
if inexorable, when it took effect.
It will take weeks, they said, for the Agriculture
Department to find storage space and recruit inspectors to
handle large-scale purchases of butter, cheese and dried milk.
By making those purchases USDA would drive up the price of
liquid milk and other dairy products.
USDA was certain to do all it could to prevent massive
disruptions of supplies to processors, foodmakers and retailers,
said analyst Mark McMinimy of Guggenheim Securities.
"As such, even if Congress careens over the 'dairy cliff,'
we expect that action will be taken to prevent a steep upturn in
milk prices from occurring," he said.
A trade group for processors, the International Dairy Food
Association, also said that USDA could delay the impact on
consumers for weeks, in part by going through a thorough process