Milk prices could skyrocket without action by House, Casey says
A gallon of milk could cost $6 to $8 early in 2013 unless the U.S. House adopts farm legislation by New Year's Day, Sen. Bob Casey warned Friday, although some Pennsylvania agriculture experts scoff at the prospect.
“We dealt with it months ago,” said Casey, D-Scranton, referring to Senate's passage of a farm bill to replace one that expires at year's end. “I don't know why they would let this go to the last minute.”
Casey said House action is needed to keep dairy prices from reverting to a 1940s-era method of price calculations that could force the government to spend an extra $12 billion to $15 billion a year on subsidies and cause milk prices to skyrocket.
He urged the House to pass “tax-rate certainty” provisions that the Senate OK'd in July, when lawmakers try last-minute steps to avoid a “fiscal cliff” of tax hikes and federal spending cuts.
Congress typically enacts farm bills every five years. Without one, milk pricing goes back to a “parity” system under a 1949 law that sets minimum payments to dairy farmers.
Parity pricing is based on economic conditions from 1912 to 1914, before modern farming methods raised production levels and efficiency, and with adjustments for inflation it would lead to steeper costs.
The formula hasn't been used since the early 1980s. Milk costs are based on market prices for two types of cheese, plus butter, nonfat dry milk and whey, said Alan Zepp, risk management program coordinator for the Pennsylvania Department of Agriculture's Center for Dairy Excellence.
In Western Pennsylvania, the minimum retail price for a gallon of regular milk is set at $3.95 for January, according to Pennsylvania's Milk Marketing Board.
“I'm very comfortable that Congress will enact something, that we won't revert to parity pricing,” Zepp said. “All the mechanisms and people and bureaucracies that were in place are not in place now. To go back to parity pricing would take a major overhaul of the Department of Agriculture.”
Higher milk prices seemingly would benefit the state's 5,000 dairy farmers — an $8-a-gallon retail price translates to $36 per hundred pounds paid to a farmer, compared to $18.50 now — but parity pricing would trigger higher feed prices and other production costs.
“It makes for a lot of sidebar conversation but not too many people take it seriously,” Zepp said.
The House Agriculture Committee passed a farm bill in a 36-11 vote. But disagreements over the federal food stamp portion of it — representing 88 percent of total spending, even with cuts — are a hurdle to bringing the measure to a full vote, said Rep. Glenn Thompson, R-Centre County, a committee member who voted for the bill.
At this point, “everyone in Washington is aware of the negative consequences” of reverting to the old pricing method, Thompson said, but passing the farm bill in coming days is unlikely.
“What I am hoping for, within the complexities of the fiscal cliff (talks), is a six-month extension” of the law, Thompson said. The House could work on changes and vote by March, he said.
Even without action, prices wouldn't shoot up right away because agriculture officials would have to write pricing rules, said Rick Ebert, vice president of the Pennsylvania Farmers Bureau. He and his brother, Bill, operate a farm in Derry with 80 Holstein cows.
Milk prices are volatile.
“We are hitting higher highs and lower lows,” based on whether domestic and, increasingly, world markets are deemed to be under- or oversupplied, Ebert said. “It's extremely hard to do business.”
Kim Leonard is a staff writer for Trib Total Media. She can be reached at 412-380-5606 or email@example.com.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Super Bowl ads win by playing to viewers’ emotions, experts say
- Pipeline companies weather downturn in prices of natural-gas, oil
- Super Bowl draws big increase in first-time advertisers
- McDonald’s replaces CEO amid sales decline, effort to transform image
- U.S. Steel maps out greater efficiency for 2015
- Alibaba ripped in report
- ‘Patient’ Fed keeps interest rates flat
- SEC alleges BNY Mellon bribed foreign investors by handing internships to their relatives
- Pennsylvania shale gas producers received hundreds of environmental citations in 4 years, PennEnvironment says
- U.S. Steel has 1st profitable year since 2008
- Stocks lose footing on Fed statement