Could milk prices double? Local ag expert, dairy farmer weigh in on ‘dairy cliff’

MARSHALL CO. — Rumors of a $6-8 gallon of milk if a new farm bill isn’t passed this year are probably unfounded, said Purdue Extension Educator Bob Yoder.
“If we do not have a new farm bill, or the present bill isn’t extended…(prices) would revert back to the 1949 initial program — prices established to guarantee profitability in the dairy industry,” said Yoder.
He continued, “If you use the same formula they used back in 1949, it would be like doubling the price of milk. There’s speculation that milk prices in the grocery store could climb up to $6 a gallon if that would be implemented. There’s a lot of questions surrounding that as to whether that would actually happen. To say that milk could be $6 a gallon is a little bit speculation at this point.”
Yoder said that all the attention given to this year’s fiscal cliff crisis is causing unneeded drama for the farm bill. Concerns are raised about rising grocery prices each year Congress must update or pass a new farm bill, he said — which happens every five years.
“It seems like every five years this happens,” said Yoder. “What is unique this year is that the entire budget is also up in the air.”
Plymouth dairy farmer Floyd Houin said that $6 milk “is a possibility, but not likely to happen.”
“I think the likelihood of the (1949) farm bill being triggered and us actually being paid that higher price (for milk) is not very likely,” said Houin. “We are paying more for feed, and eventually that is what is going to make milk (prices) go up, more so than the farm bill.”
Yoder noted that the summer’s drought has caused the livestock sector to struggle because of higher cost of feed.
“Milk prices will go up naturally because feed prices are going up,” said Yoder. “It costs a lot more to produce a gallon of milk than it did before the drought.”
“The drought is affecting the cost of producing milk,” said Houin. “Hay, corn, and soybean meal are higher than a year ago, and the stuff I have to buy is costing me more.”
Houin said he believes the spike in feed cost will last until the next normal crop.
“By next fall, hopefully our costs will go down,” said Houin.
Yoder said an extreme bump in milk price as a result of the farm bill is “a what if scenario.”
“I don’t think it will play out even if it happens,” said Yoder. “The real scenario now is that the price of feed went up (because of the drought). It’s getting better. We went through a really stressful period and we are not out of the woods yet.”
Yoder added that he knows farmers who have left the dairy industry this year because of the lack of profitability.