Deal reached to stop the $6 gallon of milk

Dec 31, 2012

Congress seems to have reached a deal to stop milk prices from rising to a warned about $6 a gallon in the New Year, but it's unclear if it will be voted on before the end of 2012.

That doesn't mean the end of milk for your cookies starting New Year's Day, says Bruce Krupke, Executive Vice President of the Northeast Dairy Association.

Without a new Farm Bill - or an extension of the 2008 version on the table now - pricing regulations for milk will revert to a 1949 system for buying milk. After inflation adjustments, politicians have been warning that milk prices could double, or higher. (A gallon of milk right now goes for about $3, give or take.)

A deal is on the table to stop milk prices from rising to $6 a gallon.
A deal is on the table to stop milk prices from rising to $6 a gallon.
Credit wander.lust / via Flickr

But that will take some time to kick in, says Krupke.

"You will not see higher priced milk Wednesday morning, or for the foreseeable short future," he says.

He predicts in about two-to-three months, milk prices would start to increase. They wouldn't hit $6 for about six months, he says.

Congressional leaders appear to have struck a deal to extend the 2008 Farm Bill, which keeps prices where they are. Farm bills typically last for five years. It's not uncommon for Farm Bills to go more than a year after their expiration to be renewed or reworked, Krupke says.

A spike of about $3 per gallon for milk would not necessarily be a good thing for New York's dairy farmers. The high price could scare off consumers and drive down dairy sales, Krupke says.

The hold up over whether to vote on the extension has to do with funding for benefits programs, like food stamps, that are also part of the Farm Bill the Associated Press is reporting.

The deal on the table now extends the 2008 Farm Bill another year. Then Congress will need to work out a new package.

"Congress needs to sharpen their pencils, listen to the industry, and put together a good Farm Bill package," Krupke says.