Friday, December 28 2012, 10:12 PM CST
Dairy cliff could result in higher cost of some groceries
By Jessica De Nova/KTVL.com
MEDFORD, Ore.-Federal funding for many agricultural programs is only good through March 2013, pressuring Congress to pass a Farm Bill to replace the one that expired at the end of September, and keep prices at the grocery store, down.
Since the end of September, farm regulations have
been operating under the Agricultural Act of 1949, which says the
government must purchase milk at a price twice higher than it is today.
The 2008 Farm Bill covers all crops planted this year, giving lawmakers some time between the end of the expired bill and Jan. 1, when the price of some products, like milk, could rise.
"It helps my husband sleep and if, um, if it goes up, we won't be able to buy as much, cause you know everybody's on a budget," says Amy Lytlebielby on the possible rise in the cost of milk.
Barb Goheen, on the other hand, may have to cut down on other dairy products if they increase in price.
"Probably not the milk, probably more on the cheese and ice cream if it goes up a lot," says Goheen.
In the end, the federal government determines how much dairies will pay for raw milk.
"They use some complicated formulas based on, you know, cheese inventories across the United States and what cheese and butter are trading for on the Chicago Mercantile Exchange, to come up with some numbers that they plug into this formula, that then goes to tell us what we're gonna pay for milk," says Umpqua Chief Operating Officer, Steve Feldkamp.
This raw price helps dairies determine how much they will charge their distributors, such as grocery stores, for the finished product.
At this point, there are only "what if" scenarios.
If Congress does not have a new farm bill in time to cover expiring farmer subsidies, it may cost farmers more to produce.
"Then that will probably drive the cost up, which ultimately goes to affect the price of milk at the grocery store," says Feldkamp.