Friday, December 21, 2012

Why Milk Prices Could More Than Double After January 1

Come Jan. 1, there is a threat that milk prices could rise to $6 to $8 a gallon if Congress does not pass a new farm bill that amends farm policy dating back to the Truman presidency, reports NYT.

According to NYT, without last-minute Congressional action, the government would have to follow an antiquated 1949 farm law that would force the government to buy milk at wildly inflated prices, creating higher prices in the dairy case. Milk now costs an average of $3.65 a gallon.

Higher prices would be based on what dairy farm production costs were in 1949, when milk production was almost all done by hand. Because of adjustments for inflation and other technical formulas, the government would be forced by law to buy milk at roughly twice the current market price. The farmers would then end up selling much of their product to the government instead of in the private sector.

The Senate passed a farm bill in July. A House version of the bill made it out of committee, but House leaders have yet to bring its version to the floor.

NYT goes on:
In a conference call with reporters on Thursday, Tom Vilsack, the agriculture secretary, said the department was exploring all its options to deal with the possibility of the 1949 law going into effect.

“We will do whatever we are legally obligated to do,” said Mr. Vilsack, who declined to say what specific steps the department would take to prepare for what dairy lobbyists and industry officials are calling the “milk cliff.”
It is also unclear what the government would do with any milk it purchases under the 1949 law.


  1. It's unclear why the government would follow its own laws here and not just ignore it. They ignore plenty of other laws when it suits them.

  2. Give away a gallon of milk with every Obama phone

  3. Use your Obamaphone to order some milk. See, it's all about private/public partnership.

  4. According to that nut (Miller) over at the Washington Post who wrote the column about the govt buying back guns at 5x their market value, if the govt also bought milk for twice the value, this would be a massive economic stimulus! Facepalm!

  5. Bernanke could use his extra $45 billion per month to buy milk at inflated price, sell the milk to stores at half price, but give the farmers the higher price, rather than giving it all to the banks.