One Hand Clapping for Last-Minute Milk Price Save

January 7, 2013

No quick spike in milk prices after all. The “fiscal cliff” package the House and Senate passed includes an extension of most, though not all provisions in the 2008 Farm Bill, including the dairy price support programs.

Many dairy farmers are unhappy in part because they want the programs replaced with a voluntary program that would insure participants a formula-based profit margin.

This was part of the new Farm Bill the Senate passed and also in the new Farm Bill that languished in the House — reportedly because House Speaker John Boehner couldn’t count enough votes for it.

Not all dairy farmers wish the new Farm Bill had become law, however. Some are fine with the existing programs, assuming positions their associations have taken are a reliable indicator.

The milk and food manufacturers are also relieved because the insurance program would have conditioned full payouts on production cuts — thus presumably driving up the prices they would have to pay.

So we’ve still got dairy subsidies, but their costs aren’t offset as they would have been in the revamped Farm Bill. Congress instead took the money out of SNAP (the food stamp program).

Benefits are intact, for the time being. The $110 million needed to protect dairy farmers from profit losses came out of the portion of SNAP that funds nutrition education programs. (Anyone else see the irony here?)

Would that this were the end of SNAP cut issues. But it won’t be.

The current benefits provisions might seem protected through the end of this fiscal year, since Congress extended them along with the dairy price supports.

But it will be looking for significant savings to replace the briefly-suspended across-the-board cuts.

Perhaps even larger savings — and all on the spending side — since Republicans say they won’t raise the debt ceiling unless the additional borrowing authority is matched, at least dollar for dollar, with spending cuts.

And they’ve got their eyes set on entitlements, e.g., programs that guarantee benefits to everyone who meets the eligibility criteria. Though their pronouncements often name Social Security and Medicare, SNAP falls into that category too.

Whether SNAP cuts become part of the next “fiscal cliff” deal remains to be seen. So does what happens when the extended provisions of the Farm Bill expire at the end of September — whether SNAP falls under the spending-cut knife before or not.

What we see already, however, is that the Farm Bill picks winners and losers — not only among dairy farmers, but within the agriculture industry as a whole.

We consumers win and lose also — mostly the latter, I think.

In the narrowest sense, we were winners in the last-minute milk price fix, since without it, milk prices could have more than doubled.

In the larger sense, however, we’re losers because we pay for the dairy subsidies twice over — both with our taxpayer dollars and in the prices we pay at the grocery store, though the latter are also jacked up by other price-manipulating mechanisms.

Maybe not a big deal for those of us who can afford a bit extra for milk, yogurt, cheese and a variety of other processed foods, e.g., bread, soups, lunch meats.

But for SNAP recipients trying to get along on a per-person average of about $4.46 a day, those extra pennies make a difference.

Learning how to eat healthfully on the cheap too, but Congress picked them as losers on that.


Drink Your Milk NOW … Eggnog Too

December 27, 2012

Well, the U.S. House of Representatives certainly treated us to an egregious display of dysfunction, didn’t it?

One of the less reported aspects was its failure to pass a Farm Bill, i.e., a piece of legislation to renew, with revisions, a host of food and agriculture programs.

So what we have now is the last permanent version of the Farm Act, signed into law in 1949.

Anti-hunger advocates aren’t worried about this — yet. SNAP (the food stamp program) won’t expire because Congress put a temporary extension into the continuing resolution that will keep federal programs funded until March.

Advocates are worried because both the draft House Farm bill and the Farm Bill the Senate passed would cut benefits for about half a million households.

Perhaps I should say remaining households, since the House version would toss at least 1.8 million — maybe as many as 3 million — people out of the program.

Many farmers are unhappy because the various programs that protect them from losses depend on the Farm Act, as do other programs that benefit them, e.g., funding for their efforts to conserve natural resources.

Still, most of these were also extended until March — about the time crop farmers start planting.

But what about dairy farmers? They, of course, produce and sell milk year round.

One of the programs that supports milk prices has altogether expired because it was created after 1949 and not extended in the CR. The other program — the Dairy Price Support Program — has reverted to its 1949 form.

Under this program, the U.S. Department of Agriculture purchases milk — or more recently, certain products made with milk — when prices fall below specified levels. The latest Farm Act set these as fixed dollar values.

But back in 1949 and for some time thereafter, the target level was set as a ratio between milk prices and farm costs, including family living costs.

Failure to pass a new Farm Bill means that the Agriculture Department will have to use the 1949 formula, with adjustments for inflation and some other technical factors.

It will thus have to buy milk to support a price that’s roughly double the current market price.

So it’s reasonable to expect that dairy farmers will initially choose to sell to the government rather than to commercial sources. The old law of supply and demand will kick in, driving up retail milk and milk product costs.

The New York Times estimates costs as high as $6.00 — or even $8.00 — per gallon of milk. At the high end, this is nearly twice the average daily SNAP benefit.

But SNAP benefits will be lower before the new year ends — even if Congress decides not to make further cuts. Which, at this point, seems unlikely.

And WIC (the Special Supplemental Nutrition Program for Women, Infants and Children) will be cut by 8.2% if Congress doesn’t put the brakes on sequestration, i.e., the impending across-the-board cuts to programs that depend on annual appropriations.

More than 900,000 mothers and young children will be dropped from the rolls, according to Democrats on the House Appropriations Committee.

This figure, their letter indicates, was based in part on food prices projected last fall — presumably prices for foods that participating mothers can buy with WIC coupons.

Milk and cheese account for about a third of WIC food spending. Double the costs of these and we should expect to see many more low-income families denied the specially-tailored nutrition assistance and other services that help give children a healthy start in life.

Similar results, of course, if Congress replaces sequestration with a bill that shifts all the mandated savings to non-defense programs that are already subject to sequestration and/or to safety net programs the current law protects.

The latest House-passed bill does both. The SNAP cuts are even worse than what we’d seen before. And the radically-low cap on non-defense appropriations puts WIC at risk of a bigger cut than sequestration itself.

These — or some compromised version — seem to me a greater danger than a long-term lapse back to the 1949 Farm Act.

On the other hand, it’s hard to predict what this Congress will do — or more precisely, fail to do.

So we can only hope that members heeded the President’s advice and drank their eggnog because the price could skyrocket.

Suggest we all do the same to get our minds off these troubles for a bit.


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