WE INTERRUPT the drama over the “fiscal cliff” to bring you news of yet another scary precipice: the “milk cliff.” Congress has not yet passed a new five-year bill reauthorizing agriculture programs. If lawmakers do not pass a bill by Dec. 31, the country will revert to 1949 dairy price support law. Under those 63-year-old rules, the Agriculture Department would be required to buy dairy products at $40 per hundredweight, or about twice the current market price. That would deliver a windfall to producers but drive milk prices up to as much as $8 per gallon in the supermarket.
The conventional wisdom is that this pending mess is yet another symptom of congressional gridlock — for which dairy policy itself is blameless. The Democratic-controlled Senate has passed a farm bill, and the Republican-controlled House Agriculture Committee has passed one, too, though it has not yet come to the floor. Both versions would replace existing milk subsidies with a new subsidized insurance program to ensure producer profits even when prices are low. The impasse over the farm bill relates to other provisions and to cost — currently $969 billion over 10 years in the Senate version, which is $12 billion more than what is in the House version, which many Republicans want to cut even more.