It’s not just the so-called “fiscal cliff” that Congress is trying to resolve Monday. A tentative agreement on what’s been dubbed the “dairy cliff” is aimed at avoiding a government-induced spike in the price of milk.
Northwest dairy farmers are paying close attention to those negotiations. Without an extension of the farm bill, a 1949 law will kick in, forcing the government to buy dairy products at hugely inflated prices by today’s standards. That would create an artificial dairy shortage.
The Secretary of Agriculture has warned consumers to brace for milk that could cost $7 a gallon if Congress doesn’t act.
Jim Krahn of the Oregon Dairy Farmers Association doesn’t expect to see that overnight. But what will really happen — nobody knows.
“That’s a good question,” Krahn says. “People have made assumptions on what will occur. It’s something that’s never occurred before. But with the disfunction in D.C. We’re seeing a lot of things occur that have never occur before, so …”
Even dairy farmers, who stand to gain from a doubling in price, think it would disrupt the market.
Companies that use large amounts of dairy are also worried about a price spike. In the Northwest, Darigold and Starbucks are both paying close attention.