Milk prices set to stay low because Farm Bill extension

CAPE GIRARDEAU COUNTY, MO (KFVS) - Usually lawmakers come up with a new "farm bill" plan every five years.

In 2012, they couldn't reach an agreement, and decided to extend the current plan for another year so products like milk didn't skyrocket in price.

Some people say the extension is good because prices won't go up, and farmers know what to expect for the 2013 year.

"I think it's good because it provides some continuity, farmers will know that they had the same program in 13 that they had in 2012 that way they can make plans accordingly, they'll know what the farm program will be and how it will affect them," said Terry Birk, Farm Service County Director.

But, those very same people also say lawmakers are just pushing back a bigger problem that will eventually have to be solved.

"We got a band aid over for a year now, but we still need to get a long term farm bill done, that will provide a lot more continuity when farmers can plan for 5 years out, rather than just one year out," said Birk.

"It's really the lack of action more than anything, they just keep kicking the can down the road and failing to address the real problem," said Jerry Siemers a Cape County dairy farmer. "The fact that we can't produce milk at the same level here in the state of Missouri as they can in California, Texas, Nevada, and so we're going to have to come up with some sort of pricing structure that stops the end fighting between myself and the same person in California."

Most of the provisions in the farm bill will go through September 30, 2013, while the dairy product price support program will continue through December 31st.

Siemers said in the past five years he's seen a more than 20 percent drop in revenue, but also watched the farm expenses go up more than 50 percent. He knows a lot of farmers that plan to leave the business.

"If you look at the nutrition that's in a gallon of milk or ice cream, or cheese or stuff like that, there's definitely not that in soft drinks or sports drinks, or anything like that, and yet someone's willing to pay more for a gallon of sports drink that they are a gallon of milk," said Siemers. "There's something wrong with that picture whenever sports drink is acceptable but milk is not."

Even with the farm bill extension, he said that money doesn't even pay for the feed for one month.

Farmers tell me a big thing they want people to know is even though it's called a "farm bill," almost 80 percent of the multi-billion dollar program goes to food assistance or food stamps.

"I had this lady kind of berate me awhile back because of the welfare we were getting from the government that we don't deserve welfare, well let's see I put in an average of 75 to 80 hours a week to basically make a little bit more than minimum wage, and your begrudging me because I get enough out of the federal government through the milk program that doesn't even pay one month's feed bill," said Siemers.

If lawmakers would not have extended the farm bill, it would revert back to legislation from the 1940s, which paid farmers to keep the supply of milk and other commodities low, hence the potential higher price spike in milk.

"I think immediately it wouldn't affect us, I mean we'd love to see the extra money in the paycheck, pay off extra bills and stuff like that, purchase some new equipment that we've had to put on the back burner because of as bad of a year as we had in 2012, long term though it would have been a self defeating prospect, because when the prices goes up, it's not but a matter of time before everybody starts adding more cows to the dairy herd because they want to maximize their share of the market money, once that happens then we run into the over surplus problem again and the prices start going back down," said Siemers.

The Congressional Budget Office is reporting that the new legislation would increase certain payments to dairy producers, but reduce spending on nutrition education by the same amount.

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