‘Dairy Cliff’ Averted with 9-month Extension
A deal approved by the U.S. Congress late Tuesday to avoid the automatic tax hikes and spending cuts known as the "fiscal cliff" also includes measures to avert the "dairy cliff" -- a steep increase in milk prices.
The tax agreement contains a 9-month fix for expiring farm subsidy programs by extending a 2008 farm law. That gives lawmakers time to come up with a new 5-year replacement.
"It seems like consumers are the only clear winner of this extension," said Marin Bozic, an assistant professor in dairy foods marketing economics in the department of applied economics at the University of Minnesota.
"They will see dairy prices continue to be affordable. The silver lining is that the way the bill has been extended ensures that all dairy producers will be protected."
Without the fix, the farm law would have expired and dairy subsidies would have reverted to 1949 levels, meaning retail milk prices could have doubled to about $7 a gallon in coming weeks or months.