The International Dairy Foods Association (IDFA) sent a letter to Secretary of Agriculture Tom Vilsack urging him to avoid or delay the impact of a 1949 law that could drastically raise milk prices.
The letter outlined legal options available to the government to avoid this "dairy cliff," which could impact the pocketbooks of millions of consumers and taxpayers.
In the letter, IDFA described the authority the Secretary has to avoid affecting milk markets, which would give Congress additional time to finish a new farm bill in the new year. The 2008 Farm Bill expires on Dec. 31, requiring the U.S. Department of Agriculture to revert to outdated, underlying laws that don't reflect current market conditions or international trade in dairy products.
Because the USDA does not have regulations on the books to implement the old law, the agency will need to develop new ones using a process that could take several weeks or months.
"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," IDFA stated in the letter.
Congress has not been able to come to agreement on new farm legislation and likely will need to pass an extension of existing law, as they have done for most farm bills passed in the last 30 years. Dairy policy remains just one area where there is significant controversy about how the government should update agricultural policies.
"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. 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," IDFA noted.
IDFA supports policies that would give dairy farmers access to USDA-subsidized insurance, similar to what is available to grain farmers and other agriculture sectors. IDFA opposes any new policies that would require the government to artificially raise milk prices--like implementation of the 1949 Act and those in the Dairy Market Stabilization Program included in the proposed farm bill. IDFA supports the bipartisan measure offered by Reps. Bob Goodlatte (R-VA) and David Scott (D-GA) that would provide subsidized revenue protection for dairy farmers without government management of milk prices.
"This type of situation is not new, as farm bills have been extended many times," said Connie Tipton, IDFA president and CEO. "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 USDA will take careful and deliberate actions to avoid short-term market disruptions."
The full letter is available at http://idfa.org/files/resources/letter_to_secretary_vilsack_12-27-2012.pdf.