brIf Farm Bill Is Not Renewed, 1940s Era Dairy Law Will Kick In, Requiring Government To Purchase Dairy Products, Such As Cheese and Butter, At Double Current Market RatesbrbrbrAccording To Agriculture Economists And Federal Analysis, Government Purchases Of Dairy Products Under Outdated Law Could Drive Fluid Milk Prices To Almost DoublebrbrbrSchumer Will Say An Extreme Faction of the House of Representatives Is Blocking Farm Bill In The Hopes Of Gutting Nutrition Programs and Other Safety Nets

U.S. Senator Charles E. Schumer today revealed that unless the Farm Bill, which expires today, is renewed shortly, milk prices in stores across New York could double, according to agriculture economists.  This is because starting tomorrow, October 1st, the nation will begin to revert to 1940's era agriculture policy until a new Farm Bill is passed.  If carried out, the 1940's era policy requires the government to purchase nonfat dry milk, cheese and butter at prices significantly above current market rates.  The massive government purchases of dairy products under this outdated law could cause milk prices to rise above $6 per gallon, according to the National Milk Producers Federation (NMPF).


Schumer will say that the easy way out of this problem is for the House of Representatives to pass the Farm Bill that was passed by a large bipartisan majority in the Senate.  A more detailed explanation of why milk prices would double is below.


"They say you shouldn't cry over spilled milk, but it seems perfectly reasonable to cry over a hundredpercent increase in the price," said Schumer.  "This is an entirely avoidable and unnecessary burden on families, and it could be easily addressed.  All the leaders of the House of Representatives have to do is put the bipartisan Senate Farm Bill on the floor for a vote.  It will pass, and we can avoid this problem all together."    


"In these continuing difficult economic times, initiatives to ensure that the price of food does not rise any further merit support," said Monsignor Kevin Sullivan, Executive Director of Catholic Charities. "Struggling working families cannot afford to have their food bills rise any higher.  Our food pantries and emergency food programs are able to feed fewer of our neighbors in need as prices rise. Feeding our Neighbors Campaigns such as Catholic Charities has undertaken - while important and effective can only do so much to cope with an economy that continues to make it hard for families to provide for the basics of nutritious food and affordable housing." 


The Farm Bill is enacted every five to seven years and provides farm and food policy for America. The 2012 Farm Bill passed the Senate on June 21, 2012 by a bipartisan vote of 64 to 35,  however, it remains stalled in the House of Representatives. The House bill passed out of committee but House leadership has refused to bring the Farm Bill to the floor.


The current Farm Bill, which passed in 2008, will expire today, September 30th, 2012.   Once expired, our agriculture law will revert to what existed in the 1930s and 1940s, before the first Farm Bill was passed.  The law would then require USDA to begin purchasing butter, cheese and dry milk at a price that is approximately double the current market price.



Additional Background:

Under current law, the federal government may purchase a specified amount of dairy products, such as cheese and butter, in order to maintain a certain minimum price of milk, and a certain level of demand for the nation's dairy farmers.  The government determines the price it pays for these products by considering how much milk goes into each product.  For example, if a pound of cheese requires 5 quarts of milk, the federal government could determine how much it would pay for that cheese based on the cost of those five quarts.  For this example assume that the price of raw milk is 2$ a quart, so the federal government would factor $10 worth of milk in their calculations on how much to pay for the cheese.


If current policy expires, however, the government could be required to purchase certain types of dairy products, such as cheese, butter, and dry milk and act as if the price of the milk that goes into that product has increased threefold.  In the example from the previous paragraph, the federal government would have determined the price it would pay for the cheese based on $10 worth of milk.  But now, if current law expires, the government could have to purchase cheese based not on $10 worth of milk per pound of cheese, but on $30 worth of milk.


The effect of this policy change would be dramatic.  It would mean that the government could be essentially required to purchase dairy products at what ends up being double the market rate. The demand for processed dairy products could be so high that demand for fluid milk would dramatically increase, perhaps as much as double its price as well.


The dairy industry is New York's largest contributor to the agricultural economy and in 2009, generated $1.7 billion. According to the New York State Department of Agriculture and Markets Dairy statistics, there are 5,400 dairy farms in New York and New York ranks first in cottage cheese production and third in mozzarella and cheddar cheese production. Onethird of New York's milk production is for drinking and twothirds is for processed dairy products such as yogurt and ice cream.  Dairy farmers could also be harmed by this policy change.  It could make it much hard for them to export their goods, and could create drastic price swings in the cost of the goods they produce.


Schumer today called on House republicans to quickly pass the 2012 Farm Bill to prevent the price of milk from potentially doubling for consumers across the nation. Schumer made the case that once the current Farm Bill expires, the New York dairy farms will revert back to 1940's era pricing if USDA carries out the letter of the law and the rising prices could discourage consumers from purchasing more expensive milk products. Additionally, dairy farmers who have seen an increase in exports in recent years could lose market share abroad.

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