New Year Could Bring Price Hike for Milk

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The gridlock in Washington could soon mean sticker shock at the grocery store.

Lawmakers in Washington are currently battling it out over a new $80 billion farm bill with the current one set to expire at the end of the year.

The farm bill, which sets policy for farm subsidies, the food stamps and other rural development projects, has moved slowly through Congress in the last two years as lawmakers have focused on higher-profile priorities, like budget negotiations, health care and immigration legislation.

But a failure to come to an agreement before January could drive up the price of food items, like milk, which is a real concern for David Lott, a dairy farmer in Mason.

"They say it's the 'milk cliff' and we're going to fall off the 'milk cliff,"' he said. "It would make the milk price not quite double, but it would make it a lot higher."

Come January, some estimates put the price of a gallon of milk at $8 which is nearly double the current national average of $3.46.

David Schweikhardt, agricultural food and resource economics professor at Michigan State, said the price hike can be blamed on a decades-old law that would kick in to determine the cost of food, otherwise know as "farm law" from the 1930s.

Dairy wouldn't be the only food item affected by such a move, but it would be the most immediate.

"Dairy is produced on a day-to-day basis," Schweikhardt said. "The price effects would be most evident immediately in dairy."

Schweikhardt said while he does think a price hike is definitely possible, he doesn't think milk prices will double the way some estimates have suggested.

"Primarily because a large share of the cost of diary products in the grocery store is actually the cost of transportation, labor and retailing," he said. "None of those costs would change as a result of a failure to pass a farm bill."

Regardless, Lott says he's optimistic and hopeful lawmakers can get back to business so he can stay focused on his own.

"As dairy farmers...we like to produce a wholesome nutritious product for our consumers and we want to give it to them at a fair price," he said.

The nation's food stamp program, known as SNAP, is also part of this bill. Lawmakers can't seem to agree on how much food stamps should be cut.

David Lott has more than 500 milking cows on his dairy farm in Mason, Mich.
Mason dairy farmer David Lott says he's hopeful lawmakers can come to an agreement on a new farm bill soon.
Some estimates show the price of milk doubling if lawmakers cannot pass a new farm bill by the start of the New Year.

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