Deal will prevent spike in milk prices

January 2, 2013

Staff and wire reports

Flickr/bluewaikiki
File: Milk at a grocery store.

Portions of the federal farm bill were extended through September as part of the fiscal cliff deal Congress and the President just reached.

That means consumers can breathe a sigh of relief because milk prices won’t double this year after all: The extension includes language to keep milk prices from rising.

But some Illinois farmers are not so happy. The deal excludes other provisions like energy and disaster aid for farmers.

“What’s lost is an opportunity to fine-tune farm programs so they work well for both farmers and taxpayers,” said Adam Nielsen, who’s Director of National Legislation and Policy Development at the Illinois Farm Bureau.

Nielsen said a different proposal that was in the U.S. House would have saved the country $35 billion over the next 10 years, while also helping Illinois farmers. That proposed bill would have curtailed farm subsidies, but improved crop insurance. Some Illinois farmers say that’s more important, especially in light of Illinois’ recent drought.

Sen. Debbie Stabenow, D-Mich., who chairs the Senate Agriculture Committee, said she considers the slimmed-down extension of the expired farm bill to be "Mitch McConnell's version of a farm bill." She said the Senate Republican leader from Kentucky forced bargainers to accept the version of the farm bill that appeared in the deal.

McConnell spokesman Michael Brumas responded: "Sen. McConnell put forward a bipartisan, responsible solution that averted the dairy cliff and provided certainty to farmers for the next year without costing taxpayers a dime."

Just a day earlier, Stabenow said leaders from both parties on the House and Senate agriculture committees had agreed to extend the entire farm bill. Stabenow and House Agriculture Chairman Frank Lucas, R-Okla., announced they had agreed on a last-minute move that would extend the whole bill and replace dairy programs that expired at midnight Tuesday. Expiration of those dairy programs would likely mean higher milk prices at the grocery store within just a few weeks.

But the House GOP had not endorsed that extension agreement. The nonpartisan Congressional Budget Office estimated Sunday that extending the entire bill through September, including disaster assistance for farmers affected by drought, could cost more than $1 billion this budget year.

House Speaker John Boehner, R-Ohio, has pushed back on passage of a new five-year farm bill for months, saying there were not enough votes to bring it to the House floor after the House Agriculture Committee approved it in July. The Senate passed its version in June. The bill, generally passed every five years, includes food stamps, farm subsidies and other help for rural areas.

But the prospect of higher milk prices prompted some action. Agriculture Secretary Tom Vilsack has said Americans faced the prospect of paying $7 for a gallon of milk if the current dairy program lapsed and the government returned to a 1948 formula for calculating milk price supports.

Extending the entire agriculture bill would include an overhaul of dairy programs, which was in both the Senate and House committee bills. Those programs included a voluntary insurance program for dairy producers, and those who chose that program also would have to participate in a market stabilization program that could dictate production cuts when oversupply drives down prices — which hasn't gone over well with Boehner.

In July, he called the existing dairy program "Soviet-style" and said the new program would make it even worse. Large food companies that process and use dairy products have backed Boehner, saying the program could limit milk supplies and increase their costs.

One of the reasons Boehner has balked at bringing up a farm bill is disagreement among House Republicans over how much money should be cut from food stamps, which make up roughly 80 percent of the half-trillion-dollar bill's cost over five years. Ag Chairman  Lucas has unsuccessfully pushed his leadership for months to move on the legislation despite the disagreement over food aid.

Shannon Heffernan contributed to this report.