Action sought to avert jump in milk prices

  • Updated: December 30, 2012 - 7:51 PM

WASHINGTON - House Agriculture Committee Chairman Frank Lucas, R-Okla., and Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., backed a short-term extension of a farm law that lapsed Sept. 30 as the Obama administration warned that unless Congress acts, retail milk prices could almost double.

"It is no longer possible to enact a five-year farm bill in this Congress," Lucas said in a statement Sunday. The "responsible thing to do," he said, "is to extend the 2008 legislation for one year. This provides certainty to our producers and critical disaster assistance to those affected by record drought conditions."

Three farm-related bills were filed Saturday in the House; all would stave off the potential jump in consumer milk prices should government commodity programs begin to lapse Jan. 1.

The most recent farm law, enacted in 2008, expired after attempts to pass a new five-year proposal failed. Without that plan, agricultural programs automatically return to rules passed in 1949, the basis of all subsequent legislation.

The effects of that transition have been delayed because of the growing seasons of different crops. Dairy production, a year-round business, is the first major commodity affected. In November, the U.S. Department of Agriculture put the price of a gallon of fresh whole milk at just under $3.54.

Under President Harry Truman's farm policy, the government bought supplies of a product until its price reached "parity" with the cost immediately before World War I. Adjusted for a century of inflation, the Ag Department's milk-support price today would be $39.08 per hundred pounds, more than double the dairy futures price in Chicago on Dec. 28.

Agriculture Secretary Tom Vilsack warned Sunday that consumers will pay the price without a new farm bill.

"Consumers, when they go in the grocery store, are going to be a bit shocked when instead of seeing $3.60 for milk, they see $7 a gallon for milk," he said on CNN's "State of the Union." "That's going to ripple throughout all of the commodities if this thing goes on for an extended period of time."

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