The bill, which has become more commonly known as the ‘fiscal cliff’ deal, was designed to avoid tax hikes and spending cuts. It also contains a nine-month extension on recently expired 2008 Farm Law programmes.
Many of these programmes expired 30 September 2012. The government’s current milk buying programmes expired 31 December 2012.
These programmes have now been extended until 30 September 2013.
Without this deal, the 2008 Farm Law would have completely expired and dairy subsidies would have returned to 1949 levels - effectively doubling the price of milk by up to around $7 per gallon.
This scenario could have led to the doubling of the price paid by consumers for dairy products at retail level.
Extension of the 2008 law will give US lawmakers an opportunity to reach agreement on a new five-year farm bill.
Congress’ decision to pass the ‘fiscal cliff’ deal has been welcomed by US president, Barack Obama.
The International Dairy Foods Association (IDFA) has also applauded Congress’ decision.
“The International Dairy Foods Association congratulates Congress and President Obama for reaching an agreement on how to address the important ‘fiscal cliff’ legislation,” said IDFA president and CEO, Connie Tipton. “This agreement allows Congress time to fully and openly consider future reforms to our nation’s dairy policies.”
“Dairy manufacturers are an important segment of our nation’s economy, and we are committed to working with Congress this year as formulation of the 2013 Farm Bill begins.”
“The interdependence of this industry from farmer to consumer is critical, and our nation’s dairy policies deserve to be updated and supported," she added.
The IDFA previously called upon the US Department of Agriculture (USDA) to take action to avoid or delay the impact of the 1949 law.
“An extension would allow ample time for the Senate and the House of Representatives to debate and vote upon the many controversial aspects of that complex bill, including dairy policy,” said the December 2012 letter to US Agriculture Secretary, Tom Vilsack.
‘Devastating blow’ to farmers
The National Milk Producers Federation (NMPF) has, however, come out in opposition to the deal.
“The Senate’s vote earlier today on a nine-month extension of current farm policy is a devastating blow to the nation’s dairy farmers,” said NMPF president and CEO Jerry Kozak.
“After months of inaction, the plant that passed overnight as part of the fiscal cliff package amounts to shoving farmers over the dairy cliff without providing a safety net below.”