Will the Price of Milk Double?
Is Your Breakfast At Risk?
Introduction
Your morning bowl of cereal may soon become a victim of our dysfunctional Congress. Due to Congress' inability to agree on a renewal of the Farm Bill, the average price of milk may more than double to over $6 per gallon in 2013!
Average Milk Prices, April 2012
City
| Average Retail Price for a Gallon Whole Milk
| |
|---|---|---|
Atlanta, GA
| $3.82
| |
Baltimore, MD
| $3.42
| |
Boston, MA
| $3.62
| |
Chicago, IL
| $4.16
| |
Cincinnati, OH
| $2.72
| |
Cleveland, OH
| $3.32
| |
Dallas, TX
| $2.95
| |
Denver, CO
| $3.19
| |
Detroit, MI
| $2.96
| |
Fort Lee, NJ
| $3.76
| |
Hartford, CT
| $3.87
| |
Houston, TX
| $3.65
| |
Indianapolis, IN
| $3.64
| |
Kansas City, MO
| $4.13
| |
Louisville, KY
| $2.99
| |
Miami, FL
| $3.74
| |
Milwaukee, WI
| $3.82
| |
Minneapolis, MN
| $3.96
| |
New Orleans, LA
| $4.66
| |
Oklahoma City, OK
| $3.99
| |
Omaha, NE
| $3.93
| |
Philadelphia, PA
| $4.07
| |
Phoenix, AZ
| $3.49
| |
Pittsburgh, PA
| $3.89
| |
Portland, OR
| $3.56
| |
Seattle, WA
| $3.06
| |
St. Louis, MO
| $3.51
| |
Syracuse, NY
| $2.99
| |
Washington, DC
| $3.79
| |
Wichita, KS
| $3.29
|
Current / Future Price of Milk
According to the United States Dairy Association, the average national price for a gallon of whole milk was $3.60 in April 2012. This price varied widely throughout the country. For example, the average price was only $2.72 a gallon in Cincinnati, OH, but a hefty $4.66 a gallon in New Orleans, LA.
The price of milk has historically been regulated by the nation's Farm Bill. The Farm Bill includes a subsidy called the Milk Income Loss Contract ("MILC"). The MILC is a program administered by the Farm Service Agency that compensates dairy farmers when the price of milk falls below a certain level. Without the Farm Bill, these subsidies would disappear, and dairy farmers would demand higher prices.
The Farm Bill also sets the policies under which the government purchases dairy products. Without the current Farm Bill, government purchases of dairy products would revert back to the outdated policies of the 1940s. This would put further upward pressure on milk prices, according to the National Milk Producers Federation.
The Farm Bill, which is typically renewed every five to seven years, expired on September 30, 2012. The renewal of this bill--the 2012 Farm Bill--passed the Senate on a bipartisan vote of 64 - 35 on June 21, 2012, but has been stalled in the Republican-controlled House. The Republican leaders of the House have said they will not consider the 2012 Farm Bill until after the November 6th elections.
Thus, the price of milk will depend on whatever action--if any--is taken during the lame duck session of Congress after the elections. If the lame duck Congress fails to pass the 2012 Farm Bill, we can expect the price of milk to skyrocket during 2013, with the National Milk Producers Federation warning that the average price of milk will rise above $6 per gallon. Considering the current Congress has passed fewer laws than any previous Congress, its entirely possible that it will not act.
Along with milk prices, the prices of other foods and beverages would also soar. This would include the prices of cheese, yogurt, ice cream and other dairy products. Also impacted would be the prices of chicken wings, chips, hamburgers and bacon, which would rise by an estimated 20%.
What You Can Do
Consumers will have few options for dealing with soaring prices for milk and other groceries in the event the lame duck Congress does not pass the 2012 Farm Bill.
Some consumers may switch to milk substitutes, such as soy, almond or other non-dairy milks.
Other consumers may use less milk, such as by having bagels instead of cereal.
Perhaps the best possibility is for consumers to contact their Congressmen to urge them to overcome their dysfunction and agree on a renewal of the nation's Farm Bill.
