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Price of milk could double soon

Dec. 22, 2012 at 12:12 PM

WASHINGTON, Dec. 22 (UPI) -- Congressional inaction could send the price of milk up to $7 per gallon in 2013, the U.S. Secretary of Agriculture said.

"If you like anything made with milk, you're going to be impacted by the fact that there's no farm bill," said Secretary Tim Vilsack in a recent interview.

National Milk Producers Federation spokesman Chris Galen called the possibility that milk prices may double -- from the current average of $3.65 a gallon -- the "dairy cliff," CNN reported Saturday.

Many of the federation's 30,000 dairy farmer members fear a consumer revolt if milk prices double, with shoppers turning to other beverages and using milk replacement products, like soy milk.

There is time for Congress to intervene, with a stop-gap pricing agreement that would prevent the price from rising until a new farm bill was in place, but as matters stand the farm bill expired in the summer and several provisions are coming to the end of their shelf-life, which is Jan. 1 for the milk subsidy provision.

The government keeps the price of milk up by buying dairy products if the price falls below a set threshold. If the subsidy ends Jan. 1, the government would have to use a default formula -- a pricing formula set up in 1949 -- that would force the government to buy milk at about twice the current price.

In the meantime, Congress has been preoccupied with the other cliff, the so-called fiscal cliff, the combination of $500 billion in spending cuts and tax hikes that would take effect Jan. 1 if a compromise budget bill is not passed.

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