Dairy processors face uncertain new year

by Keith Nunes
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KANSAS CITY – While the nation’s focus has been on congressional deliberations related to the so-called “fiscal cliff,” the food and beverage industry, particularly the dairy sector, has been waiting to see what Congress will do about the soon-to-be-expired farm bill.

On Jan. 1, the farm bill expires and the U.S. Department of Agriculture will be required to revert to laws dating back to 1949 that govern how milk from the farm is to be priced. If no agreement is reached, a scenario exists where the price of milk and the products and ingredients derived from milk may skyrocket.

“Although a sudden and unpredictable increase in milk prices may result in a short-term financial windfall to dairy producers, the immediate implementation of the 1949 Act would dramatically increase government spending, would force consumers to pay significantly more for dairy products and would impose long-term damage to the dairy industry,” the International Dairy Foods Association (I.D.F.A.) said in a letter to Secretary of Agriculture Tom Vilsack.

The I.D.F.A. has asked Mr. Vilsack to use whatever authorities he may have at his disposal to avoid having milk markets affected by the law and would give Congress more time to complete a new farm bill during the new year.

“In the event that no action is taken by Congress prior to the end of the year, we urge you to consider other legal authorities that are available to mitigate the impact of the 1949 Act,” the I.D.F.A. said. “If you conclude that you are required to proceed with implementation, we urge that you proceed in a thoughtful and deliberate manner using the formal rulemaking process. This will enable stakeholders, not just dairy producers and processors but also food manufacturers, food retailers, consumers and others, to voice their concerns prior to the implementation of any new rule.”

Connie Tipton, president and chief executive officer of the I.D.F.A., added that “This type of situation is not new, as farm bills have been extended many times. The Secretary of Agriculture has ample authority to postpone and even avoid any negative impact of a delay in passing a new farm bill, and we expect U.S.D.A. will take careful and deliberate actions to avoid short-term market disruptions.”
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