2

According to an article on the CBS Detroit Site a claim was made that,

he says without congressional action – an old law would kick in – and you could end up paying a lot more.

“Probably, talking in the neighborhood of $5-6 a gallon for milk,” said Nobis. “The consequences are consumers aren’t going to buy the product at that cost.”

This is presumably because the existing farm bill is set to expire.

What law is it that will kick in and cause prices to more than double?

  • Not sure of the specific laws, but like a lot of ag, dairy has been heavily regulated in the past. For example, the price of milk used to be pegged against the distance your farm was from Eau Claire, WI. – user1530 Sep 11 '13 at 22:25
  • @DA. -bringing a whole new meaning to "all politics is local". – user4012 Sep 16 '13 at 9:43
5

A bit of googling turned up this article:

The latest Farm Bill, enacted in 2008, is scheduled to expire at the end of 2012. If it expires, the 1949 Agricultural Act goes into effect, which includes a floor for milk prices...

...The 1949 bill mandates that the secretary of agriculture set a floor on prices for the milk sold by producers (usually dairy cooperatives) at what’s known as the parity price. According to the 1949 bill, that price is $39.53 per hundred pounds (PDF). The prevailing price for dairy producers is closer to $19 or $20 per hundred pounds. That $39.53 translates to roughly doubling milk prices, which means that the price for a gallon of milk would go up to about $7.

  • Sounds like bunk to me. At 8.6 pounds per gallon you get about $3.40 per gallon of milk. (8.6 lbs/gallon * $39.53/100 lbs.) – user1873 Sep 12 '13 at 0:26
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    @user1873 that's the prices paid to the producer. Add on the costs and profit margins for the actual distributor. – user1530 Sep 12 '13 at 2:35
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    @user1873 My sister-in-law ran a dairy until she was killed last year. We calculated that she was getting approximately $0.75 per gallon of milk, and less than minimum wage. Trust me when I say the distributor is making way more than $1.60/gallon. – Affable Geek Sep 12 '13 at 12:36
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    @User1873 - You also have to pay the guy that comes and gets your milk and takes it to the dairy processor. The dairy processor takes that and makes more than just milk. They make cottage cheese, buttermilk, cream, etc. – SoylentGray Sep 12 '13 at 13:59
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    @User1873 - No because the gallon of milk is only roughly 65% of the product. The premium items that are made out of the cream fetch far more than $3.50 a gallon. Though for every 3 gallons of milk you get a gallon of cream, heavy cream sells for about $2 a pint, cottage cheese is about $3 a pint, etc. – SoylentGray Sep 12 '13 at 14:15

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