December 26, 2012

A gallon of milk could cost $8 in 2013. Here's why.

There's one potential casualty of the fiscal cliff that hasn't gotten much attention at all: the price of milk.

Come Dec. 31, Washington's inaction could push the country's milk prices from $6 to as much as $8 per gallonunless Congress passes a farm bill renewing federal support for agriculture programs.

Here's how that would happen: Without legislative action in the next five days, the government will have to revert to a 1949 dairy price subsidy that requires the Agriculture Department to buy milk at inflated prices. Much like the current fiscal cliff, the law was left on the books "as a poison pill to get Congress to pass a farm bill by scaring lawmakers with the prospect of higher support prices for milk and other agriculture products," as Vincent Smith, a Montana State University professor, told the New York Times.

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