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Dairy cliff averted, farm bill back to square one

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Posted on January 7, 2013 |
By Xian Chiang-Waren



VERMONT — Under the shadow of fiscal cliff negotiations, Congress last week also passed measures to avert an anticipated spike in milk prices, which in the absence of a new Farm Bill was set to occur on the first of the year.

The dramatic increase in milk prices would have come to pass if subsidies from the 2008 Farm Bill had expired on Jan 1. That would have prompted a return to decades-old dairy policy, not adjusted for inflation, which would have mandated that the Secretary of Agriculture set a floor for purchasing milk from dairy producers at the rate of $39.53 per hundredweight. The current average price per hundredweight is closer to $19 or $20, meaning that the price of a gallon of milk would have effectively doubled.

Reverting to the 1949 Agriculture Act was written into the 2008 Farm Bill as an extra incentive to lawmakers; it was an example of what is known among policymakers as a “poison pill,” meant to prompt legislators to actually pass legislation.

That “dairy cliff” crisis was averted with legislation authorizing a year-long extension of several programs in the 2008 Farm Bill. But it also brings Congress back to square one, as it must draft entirely new versions of the farm bill during 2013. The 2012 Farm Bill was passed by the Senate then died in the U.S. House when Congress adjourned in October after GOP factions prevented it from going to vote.

Included in the 2008 Farm Bill programs is the Milk Income Loss Contract (MILC), which subsidizes dairy farmers when milk prices drop below certain levels. Sen. Patrick Leahy, D-Vt., managed to get the critical safety net extended until September as an emergency fix. Millions of dollars in federal MILC subsidies were triggered in 2012, a notably difficult year for dairy farmers in Vermont and around the country.

The deal to extend MILC was made at the expense of over $100 million in food assistance programs. The budget for the Supplemental Nutrition Assistance Program (SNAP-Ed), which provides nutritional education to families on food stamps, was slashed by a third.

“It is not the agreement that I or any one of us would have written on our own, but it does include several important provisions that will benefit every Vermonter, our state’s economy and the nation,” Leahy said, in a statement.

For Addison County dairy farmers, who struggled throughout the year as national milk prices sagged and grain prices shot sky-high throughout the summer’s long drought out West, the measures kept critical safety nets in place without offering any real solutions.

“It’s more of the same,” said Marie Audet of Blue Spruce Farm in Bridport.

But she stressed that she was very pleased by the work that Vermont’s congressional delegation had done on behalf of dairy farmers. Their work came in opposition to groups like the International Dairy Farmers Association (IDFA), which lobbied against progressive dairy reform.

“They understand it, they get it, and they aren’t affected by the IDFAs of the world,” Audet said. “They’ve done the right thing by us … Unfortunately, it’s not just them (in Washington).”

Audet, along with several other large dairy producers in Addison County, is a supporter of the Dairy Securities Act, a dairy reform program meant to replace MILC that was included in the Farm Bill that cleared the Senate last year but was never called to a vote in the House. The Dairy Securities Act would have amended a massive flaw in the current supply-demand system in which a small overproduction of milk triggers a tenfold drop in milk prices. In that situation, many farmers have no choice but to continue to overproduce in order to keep up with falling prices, which aggravates the supply-demand system even more. That draft of the farm bill died in the House when Congress adjourned before the General Election.

“I’m quite disappointed with the process,” Audet said.

Of last week’s legislative measures, she added: “At least MILC is in there. It’s a Band-Aid but it’s something that can keep a lot of farms going, through some really hard times.”

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