December 30, 2012

'Dairy cliff' could spell trouble for locals

Matthew Hamilton

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. 

Conroy’s Organics owner Mary Bushey said that, for example, if prices from Hood — one of the store’s dairy suppliers — increase, she won’t have a choice other than to increase her prices.

“We try to mitigate that somewhat because we have a lot of people who come into the store for their staples …. We do try to keep our prices competitive and as low as possible. But as with any business, we need to make a profit,” she said.

It won’t just be the price for a carton of milk that is affected, either.

Bushey said most milk is consumed in the processed form, so the price for cheese, ice cream and any other product that uses whey will be affected. Bushey said Hood, nor any of the store’s other dairy suppliers, have offered what a potential price increase could be.

“I think everyone is just waiting and watching and hoping for the best,” she said.

While dairy prices, and the subsequent surpluses of milk, are the most talked about portion of the “dairy cliff,” produce farmers could take a hit, too.

Bushey said that during the summer she tries to fill the store with as much local produce as possible.

But cuts to funding and tax relief could create problems.

She said she would like to see anything that helps in terms of tax relief or subsidies to help pay workers.

“Some assistance there is always helpful,” she said. “Labor is a big part of the cost of the foods that we eat.”

Regardless of how a new bill or extension would help, Dimock said he is hopeful that something will be passed by Tuesday. 

In the meantime, contacting representatives may be the last ditch option for people who want to see an agreement.

“Maybe people could write a letter to their congressmen to tell them to get off their stick and help some people,” Bushey said.