Glasgow Daily Times, Glasgow, KY

Local News

December 29, 2012

‘Milk cliff’ could drive up cost of milk for consumers

GLASGOW — If the “fiscal cliff” didn’t pose enough concern, milk prices are speculated to skyrocket with the “milk cliff.”

Time is running out for Congress to approve a comprehension five-year Farm Bill, which officially expired on Sept. 30. The Farm Bill funds a laundry list of agriculture programs including nutrition programs such as food stamps, crop insurance, international trade and conservation. Experts speculate that consumers and dairy farmers alike could be affected, but local dairy farmer H.H. Barlow said he doesn’t expect milk prices to rise as high as $7 a gallon.

“That’s just a sensationalized scandal,” Barlow said.

The controversy surrounding the “milk cliff” is that the Farm Bill has the formula that configures the price of milk. If nothing is done by Jan. 1, the minimum pricing of milk reverts back to Agricultural Act of 1949, which is the last time a permanent Farm Bill was passed. That model for the price of milk was based on a parity price, meaning the price was calculated in terms of how much it cost farmers to make milk. The cost of producing milk is vastly different today than it was 63 years ago. Some experts say this could lead to doubling the price of milk.

Barlow said he doesn’t believe the massive price increase of milk will occur because the Agricultural Act of 1949 also authorizes a Secretary of Agriculture to set the percentage of parity pricing to stabilize the price of milk. He thinks if there is a threat of milk prices nearly doubling the Secretary of Agriculture will kick in to stabilize the price.

His main concern is that capital gains and inheritance taxes will increase, making it more costly to pass down a family farm to the next generation.

For the full story, see the print or e-edition of the Weekender.

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