Bargainers reach accord on milk prices

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Another partisan congressional deadlock -- this one impacting cereal bowls and school lunches across the country, not to mention one of the biggest industries in Pennsylvania -- may have been resolved late Monday as bargainers reached agreement to prevent milk price increases.

Senate Agriculture Committee chairwoman Debbie Stabenow said negotiators have agreed to extend portions of the expiring farm bill through September. She said the deal includes language keeping milk prices from potentially doubling, but excludes other provisions including energy and disaster aid for farmers.

Ms. Stabenow, a Michigan Democrat, said she considered the extension to be "Mitch McConnell's version of a farm bill." She was referring to the Senate Republican leader from Kentucky, who she said forced "fiscal cliff" bargainers to accept the version of the farm bill that appeared in the deal.

With Congress failing to approve a farm bill in 2012, government dairy subsidies were due today to jump back to levels not seen since the Truman administration, which would dramatically drive up milk costs.

The Senate and House agriculture committee leaders were pushing a one-year extension Monday of the expiring 2008 farm bill to avoid that, although the calls were somewhat lost in the din of wider fiscal worries.

Without an extension, the Agriculture Department by law would be set to boost its support of milk prices to the 1949 level of $38 per hundred pounds, up from the $18 price now.

"If you like anything made with milk, you're going to be impacted by the fact that there's no farm bill," Agriculture Secretary Tom Vilsack, a Pittsburgh native and former Iowa governor, said Sunday on CNN.

"... Consumers, when they go in the grocery store, are going to be a bit shocked when, instead of seeing $3.60 a gallon for milk, they see $7 a gallon for milk. And that's going to ripple throughout all of the [farm] commodities if this thing goes on for an extended period of time."

The Senate approved an updated, long-term federal farm bill in the summer, as did the House Agriculture Committee. But the Republican House leadership never moved on the bill, partially due to differences over food stamp funding, but also language seeking to address a glut in the milk market. Democrats added plans for a government-managed system curtailing milk production and thereby boosting its prices.

The so-called "supply management" system "dictates to a farmer basically how much milk they should produce. That is best left to free market," said U.S. Rep. Glenn Thompson, R-Centre, an Agriculture Committee member. "The problems we've gotten into in the past, in all parts of government, is where the federal government has attempted to manipulate the market. Nothing good usually happens to that."

Despite such reservations, the GOP-controlled committee approved the language with hopes of getting the new five-year farm bill approved, including changes to forestry rules, farming regulations and other complicated issues. A one-year, retroactive extension of the old 2008 farm bill would likely not include the "supply management" plank, but would cost the government an estimated $1 billion in drought assistance.

An extension is "the responsible thing to do," House Agriculture Committee chairman Frank Lucas, R-Okla., said in a statement Sunday. "This provides certainty to our producers and critical disaster assistance to those affected by record drought conditions."

U.S. Sen. Bob Casey, D-Pa., said, "Any measure that helps ensure consumers aren't hit with skyrocketing milk prices is a step in the right direction. The last thing we can afford is to put added burden on the middle class as our economy is just starting to recover."

Ms. Stabenow stated earlier that "the lack of action by the House Republican leadership has put us in a situation where we risk serious damage to our economy unless we pass a temporary extension."

Doubling the government's milk support -- while sticker-shocking consumers -- would be a short-term boon, in a way, to milk producers such as those in Pennsylvania, the nation's fifth-biggest milk-producing state, who are getting slammed with high feed prices in the wake of this year's drought. But it would come at too high of a long-term price.

"It would be a windfall for farmers quite frankly struggling with milk prices," Mr. Thompson said. "But it would only be an immediate thing -- those prices, and the whole dairy system, would collapse."

nation

Tim McNulty: tmcnulty@post-gazette.com or 412-263-1581. Follow the Early Returns blog at earlyreturns.sites.post-gazette.com or on Twitter at @EarlyReturns.


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