Ahead of "milk cliff," McConnell piecing together new farm bill
Milk prices could spike to $6 to $8 a gallon in January if lawmakers fail to reach a 'fiscal cliff' deal and renew a farm bill that's been in place since 2008 and sets the price at which the government buys milk. / Photo by Scott Olson/Getty Images
To stop milk prices from climbing to $8 a gallon come January, Senate Minority Leader Mitch McConnell, R-Ky., is scrambling to piece together what is essentially a new farm bill using select scraps of the bipartisan extension deal approved Sunday by both the Senate and House agriculture committees, according to a Senate aide familiar with the bill, who called McConnell's proposal a "lose-lose."
The move comes a day after GOP leadership indicated to CBS News that it had not signed off on a nine-month extension of the 2008 farm law put forward by both chambers' agricultural committees in a last-ditch effort to avoid the "dairy cliff" awaiting Americans if Congress doesn't pass a new five-year bill or a temporary extension before year's end. It's just the most immediate of what would be gradual price increases on foods across grocery stores if Congress doesn't pass some measure to replace the farm law that expired nearly three months ago.
Technically, the country has been operating under a 1949 "permanent" law since Oct. 1, but because the 2008 law covered all crops planted in 2012, and funding for many agricultural programs is assured through March 2013, the earliest of the law's antiquated policies - milk prices based on dairy farm production costs 64 years ago - were not set to go into effect until January 2013.
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Now, the Senate aide said, McConnell is seeking to only extend parts of the deal offered by agriculture committees, including the Dairy Product Price Support Program (DPPSP), a product purchase program where the government buys up products like cheese, non-fat dry milk, and butter, at roughly the equivalent of a $9.00 all-milk support price. "Basically," the aide wrote in an email, it's "what is in the permanent law we're all trying to avoid, just at a lower level."
One sticking point within both chambers over the past several months has been how to best provide crop insurance for farmers. Peanut and rice farmers had backed the House version, which proposed $35 billion in spending cuts, and replaced the current agriculture subsidy program with what is essentially a safety net, guaranteeing government payments if crop prices fall below a certain point; corn and soy farmers preferred the Senate's approach, which had proposed $23 billion in spending, and offered insurance when revenue from a crop is more than 11 percent below average.
Instead of either of those paths, the Senate aide said, McConnell's bill would continue $5 billion in direct payments to farmers, whether they grow crops or not, and would extend at the post-August 2012 level the USDA's Milk Income Loss Contract (MILC) program, which compensates dairy producers when domestic milk prices fall below a specific level. McConnell would also propose eliminating the energy title, conservation programs, specialty crops and organic provisions, and would not include disaster assistance in his bill, the aide said.
Senate Agriculture Committee chairman Debbie Stabenow, D-Mich., is prepared to fight these changes to the bill agreed upon by her and her House counterpart, Rep. Frank Lucas, R-Okla., whose spokesperson did not immediately respond to request for comment. The Senate aide said the timing of a potential farm bill vote is "up in the air," but House leadership tells CBS News a milk "fix" may be among legislation dealt with if and when they convene New Year's Day to vote on a deal to avert the much more publicized, so-called "fiscal cliff."
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