Surge In Milk Prices Possible In The New Year - News and Weather For The Quad Cities -

Surge In Milk Prices Possible In The New Year


The fiscal cliff could affect your grocery bill. Some are calling it the "dairy cliff," where milk prices could skyrocket starting in the new year.

The average price per gallon in November was about $3.54. Come January 1st that price could skyrocket to $7 or $8 per gallon. With all the concerns over the fiscal cliff, other issues like a stalled farm bill are falling by the wayside. The cost to consumers is something many in the Quad Cities area say is hard to swallow.

"Too expensive, very expensive. If you're trying to feed a family that's pinching your purse," said one mother who buys more than a gallon a week.

It all has to do with the farm bill and renewing federal support for agriculture programs, in this case the dairy subsidy. If congress fails to pass something by the first of the year the U.S. would revert back to a 63-year old policy. It would force the government to buy milk at inflated prices, driving the cost up for everyone.

"I think that's highway robbery, absolutely. Eight dollars a gallon for a gallon of milk?" said one shopper buying milk in Davenport.

"It worries me a little bit, that's just crazy. I had no idea that was going on," said another person.

It's definitely on the radar for dairy farmers. John Maxwell just opened a new facility in Donahue, Iowa run completely by robotics. With 300 dairy cows at full production he expects to produce 2,500 gallons a day.

Maxwell says at first the price surge would benefit his business. For every one hundred pounds of milk produced he normally gets paid $15 to $18. That could jump to $30 to $40. But with that, and double the costs in the grocery store, he predicts many consumers will conserve or find other means. "Who's going to buy it, we're going to have all sorts of milk. Now we're going to have all sorts of troubles," said Maxwell.

To avoid that lawmakers can either quickly write a new farm bill in the next few days or extend the current one until something else is figured out. "You do want the law makers to get their act together," added Maxwell, "The extension of it would be good, then rewriting it so it does the right things."

The Senate passed a farm bill back in July of this year but House leaders have yet to bring its version to the floor. One suggestion is attach a farm bill extension to the fiscal cliff legislation, if a deal is reached.