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Farm bill worries push anxiety over dairy prices

The cost of dairy products could increase sharply if Congress doesn't take action on the so-called farm bill, a piece of legislation that has become an obscure tangent in the political standoff of the "fiscal cliff."

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HILLSBOROUGH, N.C. — Larry Charnign comes to the country store at Maple View Farm in Hillsborough about twice a month.

“It’s the freshest milk and eggs and cheese that you can get,” he said.

But the money he spends on dairy products could soon cost him more if Congress doesn’t take action on the so-called farm bill, a piece of legislation that has become an obscure tangent in the political standoff of the “fiscal cliff.”

The farm bill expired in September after Congress didn't complete action this year to resolve it. Agriculture industry leaders hope the farm legislation can be added to any final fiscal package before the end of the year. But if no fiscal agreement is reached, farmers could face the prospect of returning to an antiquated system for pricing milk that would bring big price increases for consumers.

The Agricultural Act of 1949 contains the basic provisions for setting milk prices. The act is superseded every time a new farm bill is passed, but if no new bill or extension is passed, the old act goes back into effect.

That law includes a mechanism for guaranteeing a minimum milk price that covers producers' costs. The government guarantees to buy their milk products at that price, but producers can usually do better selling on the consumer market. But if the old mechanism were applied to current market conditions, the government price could be double the current rate, industry officials say.

Farmers would sell their dairy products to the government instead of the private market and store prices would surge. Then prices might collapse as the government eventually sold its dairy stockpiles.

Larry Wooten, president of the North Carolina Farm Bureau, said farmers have been pressing Congress about the issue for more than two years.

“It’s unfortunate that we’ve gotten to this point,” he said. “It’s provided a tremendous amount of uncertainty for our farmers as they go to their lenders to secure credit lines and loans for next year, and so uncertainty is the big word as we talk about this farm bill.”

Wooten said he thinks the current farm bill will be extended through early January, and the next Congress will begin work on a new bill.

“There’s all this hype that milk prices are going to double, that we’re going to go back to the 1947 or 1949 farm bill. That’s not going to happen,” he said. “We’ve been here before many times on previous farm bills, and you know there will be some extension of the current farm bill, and we go on.”

Still, the uncertainty doesn’t sit well with farmers – or consumers.

“With us not having the farm bill in effect, they’ll have no guarantee on their price, basically,” Maple View Farm co-owner Mike Strowd said.

Said Charngin: “You have to have your dairy.”


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