Cliff deal halts milk price hike, disappoints farmers

Washington -- An agreement aimed at saving the nation from dropping over the fiscal cliff would also prevent a sharp increase in the price of milk, but some dairy farmers are upset about the deal.

In an angrily worded statement, the National Milk Producers Federation called the compromise approved by the Senate early New Year's Day "a devastating blow to the nation's dairy farmers."

"After months of inaction, the plan that passed overnight as part of the fiscal cliff package amounts to shoving farmers over the dairy cliff without providing any safety net below," the federation said.

Some milk producers are upset because the fiscal cliff deal, which would halt tax increases for most Americans and postpone a series of automatic spending cuts, extends all federal farm programs for another nine months.

Most dairy farmers, including those in Connecticut, wanted a complete overhaul of the federal dairy program.

They had backed "The Dairy Security Act," approved as part of a new farm bill by the Senate this year. The new act would have replaced the Milk Income Loss Contract program, known as MILC, that gives subsidy payments to dairy farmers when prices are low.

Under the Dairy Security Act, farmers would instead be covered by a voluntary insurance program that would pay out when the cost of producing milk exceeds the money made from selling it.

Insurance premiums would be subsidized for small farmers, defined as those milking 200 to 250 cows.

Farmers who enroll in the insurance program would also participate in a price stabilization program that discourages them from producing large quantities of milk during a price dip.

Many members of Congress who represent dairy farmers, including Rep. Joe Courtney, D-2nd District, support the Dairy Security Act.

But the dairy overhaul faced opposition from some food processors -- and House Speaker John Boehner, R-Ohio.

Yet all lawmakers knew something had to be done to prevent milk prices from skyrocketing to $7 or $8 a gallon.

With the expiration of the old farm bill on Sept. 30, a 1949 farm law was slated to be implemented on Jan. 1 that requires the Agriculture Department to begin buying up dairy products at a rate of $38.54 a hundredweight, more than doubling today's price of milk, cheese and butter.

Melissa Greenbacker, whose family has 150 cows in a farm in Durham, said Tuesday she's glad the price spike could be averted.

While  Greenbacker also said she's disappointed that the Dairy Security Act was not implemented, she differs with the National Milk Producers Federation on the value of the old milk program.

"If they couldn't get the Dairy Security Act into the (fiscal cliff) bill, I'm glad they extended some kind of safety net for farmers," Greenbacker said.

Milk prices have been fairly high during the last couple of years, so Connecticut's dairy farmers received few subsidies. But in 2009, when dairy prices were low, Connecticut's dairy farmers received more than $3.6 million in MILC subsidies.

The Senate-approved fiscal cliff deal faces a House vote Tuesday or Wednesday. The House may amend the deal, but it's not likely to change the section of the bill that applies to the dairy program.