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Deja Vu: The Milk Cliff

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As I start to write my last column of 2013, my mind wanders back over all the issues we have covered together in the past year. Many are old friends that we have rehashed and trashed many times. But there were a few new oddities this year. There was the Dodge truck commercial in the Super Bowl that caused American agriculture to sit up and say “Wow!”  Besides giving agriculture a big head, the commercial raised a lot of money for FFA and undoubtedly sold a lot of Dodge Ram Trucks. Another issue that came up for the first time this year was the phenomena of the fluffy cow.  One photo of a cow went viral on social media and got a whole generation interested in livestock shows. But, as I compare my last column of 2013 with my last of 2012, I find some disturbing  similarities.

 

In mid-December of 2012, we were lamenting the lack of a new Farm Bill, just as we are today. In 2012 the Senate had passed a Farm Bill and was trash-talking the House who had not. This December the House has passed a Farm Bill extension and is thumbing their political noses at the Senate who is refusing to take up the extension measure.  So we are in exactly the same spot with no Farm Bill in place, and no extension being passed. And, just like last December, the milk cliff is looming once again.

 

Like the fiscal cliff that Congress jumped off earlier this year and the shutdown cliff that our government drove over, the milk cliff is a series of unfortunate events that may occur as the result of no new dairy program as part of a Farm Bill.   In theory, with no new Farm Bill and no extension of the old Farm Bill, on January 1 the dairy price support program will revert to levels set in the 1940s. This (again in theory) would send the retail price of milk and other dairy products skyrocketing.  While only a very few in Congress understand the dairy price support mechanism, everyone on Capitol Hill knows what would happen if American consumers woke up one morning to $10 a gallon milk. That fear is what forced a compromise last December which allowed for the passage of a 9 month, Farm Bill extension. That is not likely to happen this year.

 

This December the House and Senate are playing a game of chicken. The Senate is refusing to take up an extension, betting that the USDA will not move quickly to implement the provisions of the old dairy price support program. They are betting that by mid-January the Farm Bill conference committee will have done its work and a new Farm Bill will be ready for passage.  At this point this seems a safe bet, since Secretary Vilsack has indicated he is in no big hurry to jump off the milk cliff. However, should  this process break down and no new Farm Bill be passed in January, USDA will be forced to take action.

 

Exactly why the price of milk is such an emotional trigger for American consumers baffles me.  When gasoline jumps 70 cents a gallon overnight for no apparent reason, we complain — but we fill up.  A new brand of water or super energy drink will cost $20 a gallon, but no one marches on Washington. Yet, let the price of milk go up 50 cents a gallon, and there will be panic in the streets.   

 

Will there be panic this time if we go off the milk cliff? That depends on if Congress will stop playing politics with farm policy and actually pass legislation which will provide the certainty and the opportunity for American agriculture to thrive, prosper, and produce. That is where we will start in 2014.

 

By Gary Truitt