Local farmer expects to benefit from potential dairy cliff
Fri, 28 Dec 2012 12:35:41 GMT —
BOWMAN, S.C. (WACH) -- The owner of Triple A Farms says an expired farm bill in Congress is going to hit consumers the hardest, and the so-called dairy cliff may just work in his favor.
The dairy cliff is the name being given to the plight the dairy industry could be in if the farm bill which expired last summer isn't renewed or replaced. Congress has not agreed on a new one, nor have they agreed on an extension of the old bill. If a decision is not made by the close of 2012, the Agriculture Department will be forced to revert back to the last permanent farm bill, which was passed in 1949.
"Some commodities are effected negatively," said Hal Arant, owner of Triple A Farms, a dairy farm in Bowman. "Milk comes out better for the producer."
The dairy industry comes out a whole lot better, in the short term, at least. Reverting back to the 1949 farm bill means the government would be required to buy dairy products from producers at twice today's price, but consumers would bear that burden, meaning the cost of a gallon of milk could as much as double.
"The short term benefits that we would see from this would cause us long term problems," said Arant. "They'd start drinking something else besides milk."
The potential dairy cliff would come to an industry already struggling with high grain prices from last summer's drought. Triple A Farms is working to cut those feeding costs by sending their cattle out to graze.
"Because of the high grain prices, we've really been in the red for the last couple of months, trying to buy feed and all," said Arant.
The dairy subsidy program that's been in place to protect farmers only kicks in if the price of milk drops to about half the national average, which is about $3.65 per gallon. That program expired in September, but without a dip in milk prices this year, farmers haven't seen a significant difference.
"The government would have to buy all the surplus milk," said Arant. "It sets a price floor that milk can't go below or they will buy it, and they haven't been having to do that over the last couple of farm bills."
Although farmers would cash out initially if the dairy subsidy program reverts to its 63-year-old version, Arant says extra-high dairy prices for consumers would ultimately cripple the progress the dairy industry has made with its customers.
"We fund a lot of the programs...for research and promotion and all, and a lot of work is going into that to get consumers to drink milk and use their other products," said Arant. "So why would we want to jeopardize that by running them off with high prices?"