Press-Republican

Business

December 30, 2012

'Dairy cliff' could spell trouble for locals

PLATTSBURGH — Talk surrounding the dive off the fiscal cliff rarely includes the word “surplus.”

But for local dairy farmers, a surplus could be what they have on their hands if political leaders are unable to agree on a budget plan that includes a new farm bill.

The current farm bill expired Sept. 30, and politicians have been unable to agree on a new bill, which would set the bar for prices and government financing in the agricultural market.

With the self-imposed Jan. 1 deadline just two days away, no new bill or extension of the current bill would lead to the use of the Agricultural Act of 1949.

It’s that reversion that local dairy farmer Don Dimock said could theoretically be “devastating.”

The 63-year-old legislation contains provisions for setting milk prices, which according to the Associated Press, could rise to $6 a gallon.

If consumers are turned off by a higher price, the legislation would require the government to begin to buy farmers’ surplus milk. That could lead to even higher consumer prices.

“How long is anybody going to continue to buy dairy products if that were the case?” Dimock asked.

Dimock wasn’t optimistic the government would continue to purchase a major surplus if consumers stop buying dairy, either.

“All of a sudden there would be this huge surplus and it would be up to the government to buy it. And that’s not going to last long,” he said.

When the government decides to sell the dairy it has purchased, prices could spiral downward because there would be a supply again. Farmers could also be hurt by the fact that the government would then be selling the milk, creating less of a demand for milk from them.

On the sales end, when the price of milk increases, business owners will have to increase their prices. 

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