Tonawanda News — Tuesday’s late-night fiscal cliff agreement keeps consumers and dairy farmers from going over a different ledge.
The bill Congress approved Tuesday includes a measure to avert the “dairy cliff,” a sharp rise in consumer prices for milk that could have been triggered since the expiration of the 2008 Farm Bill in September. The measure extends the 2008 Farm Bill until September of this year.
Without the extension, dairy law from 1949 would have kicked in, which would require the government to buy nonfat dry milk, cheese and butter at prices much higher than current market rates. That would raise the price of dairy products, increasing the cost for consumers.
The Farm Bill extension also retains the Milk Income Loss Contract program, a safety net that kicks in for dairy farmers when milk prices reach certain lows.
More than 5,400 dairy farms in upstate New York used Milk Income Loss Contract payments to help them get through tough times. Over $41 million had been given to farms.
Under MILC, a producer could have received federal payment that compensated up to 45 percent of the difference between the target price and market price. This program provided as much as 10 percent of annual income to upstate New York dairy farmers when the price of milk dropped.
“Consumers and farmers will not see a doubling of milk prices, which offers some relief for both,” said Steve Ammerman, New York Farm Bureau public affairs manager.
However, the Farm Bureau was advocating for reforming the safety net to margin insurance, something that had been negotiated in the 2012 Farm Bill, Ammerman added. Lawmakers now have until the fall to put together a new Farm Bill, which has been a challenge in the House of Representatives.
The Farm Bill is a five-year piece of legislation that governs the nation’s farm and food policies, including prices. A new Farm Bill was passed by the Senate in June, but has languished in the House.
U.S. Sen. Charles E. Schumer, D-N.Y., was glad to see the extension pass, but expressed his disappointment that the House did not passed the five year 2012 legislation that included many important reforms.
A dramatic spike in milk prices would have been devastating to consumers across the state and the country, Schumer said.
“I am pleased that the year-end fiscal cliff deal includes a provision to avoid the ‘dairy cliff,’ which would have meant chaos for family farmers and sticker shock throughout New York’s supermarkets, with the doubling of milk prices,” Schumer said. “For months, I have urged the House of Representatives to pass the Senate’s bipartisan five-year Farm Bill and while the extension of the 2008 Farm Bill is far from perfect, it avoids an unnecessary burden on families, schools and farmers alike.”
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 as a state, New York ranks first in cottage cheese production and third in mozzarella and cheddar cheese production. One-third of New York’s milk production is for drinking and two-thirds is for processed dairy products such as Greek yogurt and ice cream.
The nine-month extension of the Farm Bill was added to the fiscal-cliff deal before it passed the Senate in the early hours Tuesday. The House of Representatives passed the bill Tuesday night.Contact reporter Joe Olenick at 439-9222, ext. 6241.