Why $7-Per-Gallon Milk Looms Once Again : The Salt House and Senate negotiators are meeting to reconcile their two different versions of a new farm bill. If they don't reach agreement, the nation faces going over "the dairy cliff" – a reversion to 1949 farm policy that would cause a big spike in milk prices.
NPR logo

Why $7-Per-Gallon Milk Looms Once Again

  • Download
  • <iframe src="https://www.npr.org/player/embed/248648797/248718289" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Why $7-Per-Gallon Milk Looms Once Again

Why $7-Per-Gallon Milk Looms Once Again

  • Download
  • <iframe src="https://www.npr.org/player/embed/248648797/248718289" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript


The leaders of the House and Senate agriculture committees are meeting today to try and work out the differences between their respective farm bills. If they fail, the country faces what's being called the dairy cliff, a possible spike in milk prices early in the New Year. NPR's Tamara Keith reports.

TAMARA KEITH, BYLINE: I do this at least twice a day. Hey, dude, do you want some milk?


KEITH: Go to the fridge and pour a bottle of milk for my 17-month-old son. Thanks to the little guy, we go through gallons of milk every month, something we buy on each trip to the market without so much as a second thought. But if Congress fails to agree on a farm bill, economists say the cost of that household staple could suddenly double to about $7 a gallon.

Here's why. The nation's farm policy would revert back to what's called permanent law. In the case of dairy, that would be the 1949 farm bill. Tom Vilsack is the U.S. Secretary of Agriculture.

TOM VILSACK: I'm going to be put in a position where I have to invoke and implement permanent law. And I will do my job because that's what I swore an oath to do.

KEITH: The way this would play out is the government would be forced to go into the marketplace and buy milk, butter and cheese at about double the going rate. The 1949 price supports were based on a much smaller, much less efficient dairy industry than the one that exists today. Vilsack says this would distort the market.

VILSACK: So you, as a producer, would have a choice of selling it to your normal purchaser at $18 or $19 a hundred weight or to USDA for $38 a hundred weight. What do you think producers are going to do?

KEITH: Of course they would sell to the government.

JIM DUNN: Oh, it would be terrible.

KEITH: Jim Dunn is a professor of agricultural economics at Penn State University.

DUNN: Every refrigerated warehouse in the United States would be full of cheese and butter and non-refrigerated milk warehouses would be full of powdered milk.

KEITH: And for the rest of us, he says there would be sticker shock in the dairy aisle. Vilsack says there would be supply issues too.

VILSACK: That would mean that we would own a lot of the commodities and that would create shortages in the grocery store.

KEITH: And then suddenly my milk is $7 a gallon.

VILSACK: Right, if you can find it. And that's why it's just ludicrous for Congress not to get a farm bill done.

KEITH: Milk would only be the first commodity affected. Without a farm bill, other commodity prices would spike as well as the year went on, affecting every family in America. Often obscure farm policy would get personal fast. If this all sounds illogical and terrible policy, well, that's the point, says Vilsack.

VILSACK: It's a great lever to compel action. In most cases it's the reason why we've had fairly routine extensions of the farm bill for the last 50 years.

REPRESENTATIVE MIKE CONAWAY: It's applying pressure to me.

KEITH: Congressman Mike Conaway is a Republican from Texas and he's a member of the farm bill conference committee.

CONAWAY: That's the whole advantage of having permanent law that's as bad as it is - to try to get folks to create the new law that we need to for the next five years.

KEITH: But where in past farm bills have been bipartisan affairs, this year the farm bill has fallen into some of the same philosophical fights about the role of government that have gummed up the budget process and just about everything else. Tamara Keith, NPR News.

Copyright © 2013 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.