Prepare For The ‘Milk Cliff’–Buy A Cow

The “Fiscal Cliff” has been dominating the news cycle for the past few weeks, but there may be another cliff in our sights: the “Milk Cliff”.  It stems back to the Congress not passing an agriculture bill.  The bill contains a formula where the Government will buy milk from dairy farmers if the price gets too low (roughly half of the national average of $3.65 per gallon).  However, if something isn’t agreed upon by the end of the year, the Government would “be forced” to buy dairy products at double the current price which, they’re saying, would push the price up for everyone:

But instead of leaving farmers entirely out in the cold, the law states that if a new bill isn’t passed or the current one extended, the formula for calculating the price the government pays for dairy products reverts back to a 1949 statute. Under that formula, the government would be forced to buy milk at twice today’s price — driving up the cost for everyone.

“If you like anything made with milk, you’re going to be impacted by the fact that there’s no farm bill,” U.S. Secretary of Agriculture Tom Vilsack told CNN’s Candy Crowley in an interview on State of the Union airing Sunday, Dec. 30.

“Consumers are going to be a bit shocked when instead of seeing $3.60 a gallon for milk, they see $7 a gallon for milk. And that’s going to ripple throughout all of the commodities if this thing goes on for an extended period of time,” Vilsack said.

Sky-high milk prices wouldn’t necessarily be good for dairy farmers either, according to Chris Galen, a spokesman for the National Milk Producers Federation, which represents over 30,000 dairy farmers.

While it might provide a short term boost to profits, there’s a fear that consumers would either cut back on dairy or opt for imported dairy products. It could also force food makers to search for alternatives to dairy, like soy.

Seems like to me this would be a place where the government may just need to let the free market work itself out.


  1. gcp says:

    Agree government price supports need to be eliminated but we also need to reduce or eliminate the 80 billion dollar food stamp program.

          • IndyInjun says:

            Troglodytes like me missed Middle Earth but we are attuned to going back to more primitive times, if we must. When I looked at getting cows, goats seem more prudent – and appropriate.

            Middle Earth had no derivatives or a Governor who enabled them.

              • IndyInjun says:

                Derivatives are in most 401k’s. You have to pray that Bernanke has bought them up or will before you retire. Middle Georgia has a Governor who put their money on the same footing as an nonwinning Powerball ticket. Georgians might starve under a politico who ‘saved’ them from the horrors of gay marriage and having their baby aborted.

                From the Mouth of Sauron to your ears………

  2. saltycracker says:

    Who knew the farm bill is like a Vidalia onion, peel away one layer and the tears still flow.
    Except from the dairy folks and our Ag politicians/lobbyists.

  3. Rick Day says:

    I’m cool with this. Let the market invisible palms do their thing.

    Meanwhile soy futures are historically up but at a slight downturn, time to get in on the bean pot!

  4. Doug Deal says:

    Why not have everything priced by government schedule? It seems to work so well for a small group of “experts” in Washington to think for us all.

      • Harry says:

        SOCIALISM: You have two cows. The state takes one and gives it to someone else.
        COMMUNISM: You have two cows. The State takes both of them and gives you the milk.
        FASCISM: You have two cows. The State takes both of them and sells you the milk.
        MILITARY DICTATORSHIP: You have two cows. The State takes both of them and shoots you.
        BUREAUCRACY: You have two cows. The state takes both of them, accidentally kills one and spills the milk in the sewer.
        CAPITALISM: You have two cows. You sell one and buy a bull.
        PURE DEMOCRACY: You have two cows. Your neighbors decide who gets the milk.
        REPRESENTATIVE DEMOCRACY: You have two cows. Your neighbors pick someone to decide who gets the milk.

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