EXPENSIVE MILK: New Year Could Bring New Prices

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The fiscal cliff has been making news for several weeks, but there’s one consequence of going over the cliff that has hardly been mentioned.

The farm bill expired in September and many in congress have been pushing for key provisions to be tacked on to anything that passes before the New Year, one of those provisions in the Dairy Security Act which controls U.S. milk prices.

If the act isn’t renewed the government would be forced to revert back to a milk pricing system based on production costs of 1949, when most milking was done by hand.
Applying that system of pricing to today’s market could push the price of milk to as high as $8 per gallon.

Industry analysts are hopeful lawmakers will pass some kind of provision, but if it doesn’t happen it would take several weeks for the USDA to draw up a new milk purchasing plan to replace the outdated pricing rules and bring pricing back down.

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