Milk prices may spike if farm bill not extended
Updated On: Dec 27 2012 09:31:01 PM CST
As worry continues over the so-called "fiscal cliff," in addition to a 2013 tax hike, people may also face higher milk prices.
Wisconsin's dairy industry brings about $26.5 billion into our state annually and equals about 173,000 jobs.
Without a new farm bill in place by the start of the year, some fear dairy farming may become a thing of the past.
The U.S. Department of Agriculture recommends two to three servings of dairy every day, and Penny Hershberger said she wants to make sure her grandchildren are receiving that.
"These are the growing years for them and they've got to have milk," Hershberger said.
But the cost of putting milk on the table could go up. That concerns dairy farmers such as Pat O'Brien.
"My fear is that we're going to see people turning away from buying my product if the price gets too high," O'Brien said.
O'Brien and his brother are fourth-generation farmers who operate Stoner Prairie Dairy in Fitchburg.
Since the farm bill expired earlier this year, James Robson, CEO of the Wisconsin Milk Marketing Board, said he is concerned milk producers won't know what to expect during the next four years.
"If the farm bill is not replaced or extended, it reverts back to some legislation that goes back to 1949, and that has to do with the government buying surplus dairy products and then using those numbers to determine what the price of milk is," Robson said.
"If things go back to the parity level as established then, we're going to see our milk prices double and that means that price is going to have to be passed on to the consumer. The consumer can see $6, $7, $8, $9 (a gallon) milk," O Brien said.
Robson said he hopes legislators will make a decision soon.
"In discussions on the fiscal cliff, any changes or extensions to the farm bill could be included in any legislation that's passed there," he said.
The O'Brien's 230 cows produce about 2,000 gallons of milk a day. O'Brien said he's not optimistic a deal will be reached by the end of the year.
"I certainly hope they can resolve things here by the end of the year but it doesn't look very favorable," he said.
The bottom line is producers don't want the price to get so high that people quit buying milk, but they don't want the price to be so low dairy farmers can't make a living.
Before consumers see higher milk prices, the milk supply would have to build up, and that could take months. But milk producers are hoping Congress will pass some legislation to stop that from happening.
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