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Milk Could Skyrocket to $6 to $8 a Gallon

Congress is so focused on the fiscal cliff, the farm bill has yet to be renewed.

Come Jan. 1,  milk prices could rise to $6 to $8 a gallon if Congress does not pass a new farm bill that amends farm policy dating back to the Truman presidency, reported the New York Times.

If Congress does not renew the Farm Bill by Monday, the milk price formula reverts back to 1949, reported CBS Boston.

On average, a gallon of milk now costs $3.65, according to the dairy industry.

U.S. Agriculture Secretary Tom Vilsack said without a farm bill renewal farmers will be in a hurry to sell to the government, creating a shortage. It is estimated the price of milk could go as high as $8, he told the Capital Press.

If the farm bill is not renewed the government would be forced to buy milk at inflated prices, driving up the cost.

As customers demand milk, markets would look to higher-priced overseas milk producers to make up the shortage, and prices could go up on all milk products, including butter, yogurt and cheese.

Eventually, the government would sell the milk surplus, causing prices to plummet.

In the short term, consumers would pay at least twice what they now pay for milk, and dairy producers would have a payday. Eventually, consumers would get a break while dairy producers would see profits plummet.

“I think there are some serious consequences,” U.S Rep. James P. McGovern (D-Worcester), a member of the House Agriculture Committee, told the Worcester Telegram & Gazette. “It’s important that we address the agricultural issues that this nation faces.”

Action on the farm bill this year was stalled by disagreements over the food stamp program. Some conservative members of the House wanted deep cuts in that program, reported the Capital Press.

The National Milk Producers Federation and other farm groups had hoped a farm bill would be part of a final "fiscal cliff" budget package passed before Jan. 1.

However, U.S. Rep. Collin Peterson, D-Minn., said in a radio interview Dec. 20 that Congress appears unlikely to pass a farm bill by the end of the year. He suggested American agriculture may have been too successful at keeping prices low, and sharp price hikes may make people understand "what a good deal they got."

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