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Threat of dairy price increases catalyst for one-year farm bill
Kentucky Correspondent

FRANKFORT, Ky. — The new farm bill became nothing more than a one-year extension of the 2008 version, as part of the American Taxpayer Relief Act of 2012 that actually passed the first day of the New Year.

The legislation that governs farm and food policy expired Sept. 30, 2012, after a year of wrangling between members of the U.S. House. The “fiscal cliff” dilemma, which overshadowed that bill and everything else, went into the final hours of 2012 leaving many in and out of the agriculture industry on pins and needles.

The Senate finally passed “fiscal cliff-avoiding” legislation brokered by Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden that included a farm bill extension. Later that day the House voted to pass the same legislation.

It was the House that did not pass the farm bill earlier in the year after full-Senate and House Ag Committee versions were passed.
This extension was what many in the ag industry had expected since the lame duck session began after November elections. But what really brought the issue to light was the “dairy cliff” quandary that touted steep increases in dairy products had the farm bill been allowed to lapse into Permanent Law, created in 1949.

That law, still on the books, would have obligated the government to pay parity pricing to make sure dairy farmers were adequately compensated for their work. But those numbers were based on comparisons to other commodities from the early 20th century. Under those rules the wholesale price of milk to farmers would have doubled.

That sent a flurry of stories out to the public that milk prices would be increasing to $7 or $8 per gallon. Senate Ag Committee Chair Debbie Stabenow (D-Mich.) released a statement just before Christmas that said, “Fiscal cliff tax increases would hit middle class families’ pocketbooks, but so would paying $6 or $7 for a gallon of milk.

“It is absolutely critical that Congress pass a new five-year farm bill to keep food prices stable and protect America’s 16 million agriculture jobs.”

USDA Secretary Tom Vilsack released his own statement after the passage of the extension. It read, in part, “While I am relieved that the agreement reached prevents a spike in the price of dairy and other commodities, I am disappointed Congress has been unable to pass a multiyear reauthorization of the Food, Farm and Jobs Bill to give rural America the long-term certainty they need and deserve.”

Maury Cox, the Kentucky Dairy Development Council’s executive director, said the talk of skyrocketing milk prices was nothing more than a scare tactic being used by those who wanted the legislation pushed through at the last minute. He said anything’s possible, but most likely, nothing would have happened.

Cox also said before the vote, an extension was the likeliest scenario but even without the legislation, the secretary of agriculture has the authority to deal with parity pricing.

“The secretary has the authority to affect that and set prices. I don’t see where prices are going to change whatsoever. In fact, milk prices to the farm may very well have come down,” he said.
Cox opined there was much fear-mongering going on before the vote and milk was being used as a scapegoat for that.

He said it was fair to say that no one was doing the dairy farmer any favors by running around saying milk would have double in price if legislation had not passed, adding it had the potential of hurting sales even further and it wasn’t good for the dairy industry to be used in that way.

The idea of higher milk prices caught the attention of lawmakers and the general public, however, prompting a farm bill extension to run through September 2013. American Farm Bureau President Bob Stallman said an extension of 2008 farm bill is little more than a stopgap.

“We are glad that a measure is in place for most of this year, but we are disappointed that Congress was unable or unwilling to roll a comprehensive five-year farm bill proposal into the fiscal cliff package,” he said.

“Now, it will be up to the new 113th Congress to put a new farm bill in place, and we will continue to insist on the kind of reforms that were included in the proposals approved by the Senate and the House Agriculture Committee during the 112th Congress.”
The National Sustainable Agriculture Coalition was a little less kind in its summary of the extension. A statement from the organization refereed to the legislation as “awful” and a “disaster … We are extremely disappointed in the Republican leadership for proposing this deal, and in the White House for accepting it.”