Unless a farm bill passes by the end of the year, the crop subsidy program will revert to 1949 policies and the government would be required to stockpile milk until it reached $37.20 per hundred pounds. The current price is about $19.00.

Why our legislators would write ridiculous laws like this is totally beyond me, but they did.

The House wants to pass an extension to resolve the issues, but the Senate says no. So here we sit wondering if the price of milk is going to double.

Bloomberg reports Extension of Farm Subsidies Rebuffed by Senate Democrats

An extension of U.S. agriculture subsidies to late January was rebuffed yesterday by Senate Democrats, who said they won’t pass any House plan for temporary funding before Congress breaks for the holidays.

“We’re not going to do an extension,” Senate Agriculture Committee Chairwoman Debbie Stabenow, a Michigan Democrat, told reporters. “If the House leadership would just stay through next week, like the Senate is staying, we would actually be able to get” a new five-year farm-policy bill, she said.

If Congress doesn’t act before year’s end, U.S. dairy support programs will revert to a 1949 statute that when fully implemented would double the wholesale price of milk.

The Agriculture Department hasn’t said when it could implement the law, which could take months. Lawmakers are reluctant to head home for the holidays to headlines about milk prices of $7-per-gallon in the new year.

Cuts to food stamps, along with changes to crop insurance programs and other farm aid, have been stumbling blocks as lawmakers seek to resolve differences in Senate and House versions of a reauthorization of agricultural programs.

The main effect of an extension to the end of January would be to allay fears of milk prices rising after Jan. 1, when dairy is the first crop program set to revert to the 1949 policies form the underlying language of all subsequent farm bills.

Under the law, the government would be required to stockpile milk until it reached $37.20 per hundred pounds, nearly double the current price of dairy futures traded in Chicago.

Other commodities, including corn and wheat, would see their programs revert to archaic programs later in the year.

I rather doubt it comes to this but stranger things have happened.

Lots of questions:

  • Why are food stamps tied to farm bills? 
  • Why do we have crop supports?
  • Why would legislators write bills that would revert to arcane 1949 provisions?

I propose the elimination of all price supports, elimination of all tariffs, and to make some common sense reforms to the food stamp program, but I expect none of that to happen.

Mike “Mish” Shedlock