News Column

Price of Milk Could Spike in 2013

Dec. 27, 2012

John Hamlin, Statesville Record & Landmark, N.C.

For dairy farmers, 2012 was a year of high feed prices, due mainly to drought. And as the holidays give way to a new year, 2013 is already shaping up to be a year marked by uncertainty for dairymen.

For starters, Congress allowed the 2008 farm bill to expire to Sept. 30, and its successor seems to have gotten lost amid campaigning and last-ditch efforts to strike a debt deal.

The bill's expiration already means the Farm Service Agency has ended the Milk Income Loss Contract Program (MILC), which paid dairy producers when prices fell below certain levels.

And, analogous to the fast-approaching fiscal cliff, commentators have begun to speak of a "Dairy Cliff."

It works like this: If Congress fails to act, the formula used to calculate milk prices will revert to a 1949 calculation, which means the price of milk is set to double Jan. 1 unless Congress intervenes.

Ben Shelton, owner of Rocky Creek Dairy & Veterinary Services in Olin, said he has turned to the futures market to hedge his risk going into the new year.

"It's a fairly new concept, it certainly has its risks and its not for the faint of heart," Shelton said.

"We've done some for the last five or six years. We've definitely done a lot better with protecting our feed cost than protecting our milk price."

Home to 12,000 dairy cattle, Iredell County ranks first in the state and has a long history of dairy production.

Another looming problem, should Congress fail to act, is the elimination of conservation programs that save everyone money in the long run.

For instance, Jimmy Gray, who runs Grayhouse Farms with his father and brother in Stony Point, said they got money to help pay for renovations to protect the water in their stream from contamination.

"The farm bill, if it cuts out programs like that, it's really a shame because that's a tremendous help to everybody's water," he said.



Source: (c)2012 Statesville Record & Landmark (Statesville, N.C.) Distributed by MCT Information Services


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