'Dairy cliff' approaches with congressional gridlock

2012-12-22T07:00:00Z 'Dairy cliff' approaches with congressional gridlockBy ART HOVEY / Lincoln Journal Star JournalStar.com

Retail milk prices, currently at $3.65 a gallon nationally, could shoot toward $6 or $8 a gallon after Jan. 1.

Those who think Humboldt dairyman Ben Steffen will be planning an especially big New Year’s Eve celebration would be wrong.

Instead, Steffen is shaking his head over the failure of Congress to pass a farm bill that would prevent the otherwise automatic return to 1949 farm policy on the first day of 2013 and the much higher milk support prices that would go with it.

“Kids need milk to grow,” the owner of a 120-cow herd said. “This is -- it’s unconscionable.”

Plummeting over what some are calling the dairy cliff isn’t a done deal. Federal lawmakers still will have a few days to act after their Christmas recess.

But Steffen, whose job involves milking seven days a week, can’t believe Congress has gone home without doing its job in passing a farm bill or in forestalling automatic spending cuts and tax increases that also are on a Jan. 1 timeline.

“The idea that Congress needs to quit and run home because they’re on recess, while this remains undone, is ridiculous -- and pretty sad.”

The higher milk prices that go with inaction could be delayed by the implementation phase of 1949 policies at USDA offices at the state and county level. But The New York Times was among the media outlets calling attention to the possibility of shock and awe for consumers in the dairy aisle in its Friday editions.

“Any kind of jump like that would be a disaster for consumption,” Steffen said.

The scenario for higher retail milk prices evolves from a farm bill that’s been gathering dust for more than six decades. If it’s pulled off the shelf, the federal government must pay a support price for milk that’s twice the current retail price.

Milk flowing into federal commodity channels as farmers’ first choice of marketing options could, in turn, create a shortage in the private sector and prompt a hefty price hike.

Doug Klein, price support program chief at the state Farm Service Agency office in Lincoln, isn’t prepared to say what will happen after Jan. 1 -- or what won’t happen.

“I think we’re kind of waiting to see what the proposals are from the House and Senate versions” of the farm bill, he said, “so we’ve not gotten much for information.”

But isn’t time for waiting and seeing rapidly running out?

“That is correct,” Klein said.

Dan Rice of Prairieland Dairy at Firth isn’t ruling anything out either, including milk at much higher prices.

“If our government is truly that dysfunctional,” he said, “that could be a possibility. But I still hope the government will come up with something by the end of the year to prevent that from happening.

“It won’t be good for consumers,” Rice added. “It won’t be good for the industry if that happens.”

Doug Nuttelman, part of a 225-cow milking operation near Stromsburg, doubts that the government is going to be a big demand factor for the milk supply, no matter what the law says.

“The government couldn’t take all the milk that’s out there now,” said Nuttelman, who’s also on the executive board of the nation’s largest dairy cooperative, the Dairy Farmers of America.

As he sees government purchases unfolding, “all they would buy would be commodity cheese, which is cheddar, and nonfat dried milk, and maybe butter.”

The better answer is to get a farm bill passed, he said.

“The organic people are used to paying $6,” he said of the consumer sector. “I don’t think the public would want to pay that price.”

Reach Art Hovey at 402-473-7223 or at ahovey@journalstar.com

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