Niagara Gazette

December 13, 2012

Gallon of milk could double in price

Niagara Gazette

Niagara Gazette — If the U.S. House of Representatives doesn’t pass a new Farm Bill by Dec. 31, milk prices in the stores could hit about $7 a gallon, U.S. Sen. Charles Schumer, D-N.Y., said Wednesday.

In a conference call, Schumer urged the House to pass the bipartisan Senate Farm Bill in order to avoid “the dairy cliff,” which would hurt consumers and farmers alike. The increased cost would rattle the marketplace, creating uncertainty for dairy farmers and hurt product demand, the senator said.

On average, a gallon of milk costs about $3.59 a gallon locally. That would double, as other dairy products would increase in price, Schumer said.

”There’s no use crying over spilled milk, but with prices like that, it’ll cause some to weep,” he said.

Without the bill, dairy law from 1949 kicks in, which would require the government to buy non-fat dry milk, cheese and butter at prices much higher than current market rates. That would raise the price of dairy products, increasing the cost for consumers.

“As we approach the final days to get the 2012 Farm Bill passed, the anxiety is growing for farmers who have already had the safety net pulled out from under them with the loss of the MILC program,” said New York Farm Bureau President Dean Norton. “It’s a price few consumers would be willing or capable of paying, potentially upsetting the delicate supply and demand of milk.”

“Schools are in an incredibly fragile fiscal condition right now and they cannot afford either higher dairy prices or further injury to their rural tax base,” said Timothy G. Kremer, executive director of the New York State School Boards Association. “Our students need accessible dairy products for good nutrition, and our schools need a stable local tax base to provide adequate funding for educational programs and services.”

In June, the Senate passed the bill by a 64-35 margin. Schumer speculated the bill could pass in the House, but was being held by a few Republicans. Many New York representatives were in favor of the bill, Schumer said.

Schumer also wants Congress to temporarily bring back the Milk Income Loss Contract program, which provides payments to dairy farmers when milk prices go too low or cow feed costs get too high. He said more than 5,400 dairy farms in upstate New York used Milk Income Loss Contract payments to help them get through tough times. Over $41 million had been given to farms.

Under MILC, a producer could have received federal payment that compensated up to 45 percent of the difference between the target price and market price. This program provided as much as 10 percent of annual income to upstate New York dairy farmers when the price of milk dropped.

Both the Milk Income Loss Contract and the 2008 Farm Bill passed their expiration date on Sept. 30.

The Farm Bill is enacted every five to seven years and provides farm and food policy for the United States.

The dairy industry is New York’s largest contributor to the agricultural economy and in 2009 generated $1.7 billion. According to the New York State Department of Agriculture and Markets Dairy statistics, there are 5,400 dairy farms in New York and as a state, New York ranks first in cottage cheese production and third in mozzarella and cheddar cheese production. One-third of New York’s milk production is for drinking and two-thirds is for processed dairy products such as Greek yogurt and ice cream.