Tonawanda News

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January 3, 2013

Milk subsidy restored

Tonawanda News — Tuesday’s late-night fiscal cliff agreement keeps consumers and dairy farmers from going over a different ledge.

The bill Congress approved Tuesday includes a measure to avert the “dairy cliff,” a sharp rise in consumer prices for milk that could have been triggered since the expiration of the 2008 Farm Bill in September. The measure extends the 2008 Farm Bill until September of this year.

Without the extension, dairy law from 1949 would have kicked in, which would require the government to buy nonfat dry milk, cheese and butter at prices much higher than current market rates. That would raise the price of dairy products, increasing the cost for consumers.

The Farm Bill extension also retains the Milk Income Loss Contract program, a safety net that kicks in for dairy farmers when milk prices reach certain lows.

More than 5,400 dairy farms in upstate New York used Milk Income Loss Contract payments to help them get through tough times. Over $41 million had been given to farms.

Under MILC, a producer could have received federal payment that compensated up to 45 percent of the difference between the target price and market price. This program provided as much as 10 percent of annual income to upstate New York dairy farmers when the price of milk dropped.

“Consumers and farmers will not see a doubling of milk prices, which offers some relief for both,” said Steve Ammerman, New York Farm Bureau public affairs manager.

However, the Farm Bureau was advocating for reforming the safety net to margin insurance, something that had been negotiated in the 2012 Farm Bill, Ammerman added. Lawmakers now have until the fall to put together a new Farm Bill, which has been a challenge in the House of Representatives.

The Farm Bill is a five-year piece of legislation that governs the nation’s farm and food policies, including prices. A new Farm Bill was passed by the Senate in June, but has languished in the House.

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