The so-called "Dairy Cliff"—a legislative reset which could send milk prices up to $6 per gallon or more if the current farm bill is allowed to expire after December 31—is catching headlines across the country. While the issue is taking a back seat to the better-known Fiscal Cliff, the potential surge in milk prices and the changes to dairy policy proposed by both the Senate and the House could have big implications for Midwestern dairy farmers and consumers.
Ever since the mid-1900s, the USDA has provided a "support price" for dairy products in the U.S. The USDA is required to buy as much milk at that price as producers want to sell, the intention being to keep milk prices from dropping so low that farmers can't stay in business. If there's no replacement or extension of the current farm bill, the formula for the support price reverts to legislation from 1949, which would bring milk prices up to approximately $38 per hundredweight or around $6 per gallon, according to University of Wisconsin-Madison Director of Dairy Policy Mark Stephenson.
Read more in the Winona Post.