On 1 January 2013, the US Congress cleared the ‘fiscal cliff’ deal – a bill designed to avoid tax hikes and spending cuts. The bill also contained a nine-month extension on a number of recently expired 2008 Farm Law programmes.
These programmes have now been extended until 30 September 2013.
Without this extension, dairy subsidies would have returned to 1949 levels. According to reports from the US, milk prices would have increased to around $7 per gallon as a result.
While accepting that the decision to extend the programmes averted a ‘dairy cliff’, Land O’Lakes and DFA have slammed Congress for its “failure” to adopt provisions of the Dairy Security Act.
The Dairy Security Act would eliminate the current dairy products price support programme in favour of a voluntary risk management tool.
Milk price “safety net”
According to Minnesota-based Land O’Lakes, Congress’ decision has left US dairy farmers without an adequate milk price “safety net.”
“We are very disappointed Congress chose to extend the current farm bill rather than include provisions for a new five-year bill and are particularly disappointed in Congress’ failure to adopt provisions of the Dairy Security Act,” said the Land O’Lakes statement.
“Congress’ action averts parity pricing for dairy products through the duration of the extension. Parity pricing would have been disruptive of the marketplace and not been good for farmers or consumers. But the provisions in the Fiscal Cliff Bill leave dairy farmers without an adequate safety net in the face of continued volatility and high input costs.”
Commenting on the extension, Kansas City-based DFA accused Congress of turning its back on US dairy farmers.
“Although passing the American Tax Relief Act of 2012 averted a ‘dairy cliff’ that would have devastated the industry, we are increasing frustrated that legislators have again stalled the Dairy Security Act,” said DFA senior vice president, John Wilson.
“In a vote earlier last year, the Senate gave a nod to the dairy policy reform outlined in the Dairy Security Act. The House Agriculture Committee did the same. But with the clock ticking and pressure on, Congress was never even given the opportunity to vote the Dairy Security Act into law.”
“In a business climate that is so uncertain, inaction on real reform as part of a greater Farm Bill makes it more difficult for farmers to plan, operate and make business decisions in a competitive marketplace. Our nation’s dairy producers deserve better,” Wilson added.
DairyReporter.com also approached US dairy giant Dean Foods and Kraft Foods in relation to last week’s decision. Both declined to comment, and instead referred DairyReporter.com to the International Dairy Foods Association (IDFA) for an “industry perspective.”
The IDFA earlier applauded Congress’ decision.
“We appreciate that the bill includes provisions that will avoid the resurrection of dairy policies from more than 50 years ago. This agreement allows Congress time to fully and openly consider future reforms to our nation’s dairy policies,” said IDFA president and CEO Connie Tipton.