First of the year could bring "Dairy Cliff," nearly doubling the - KSFY News - Sioux Falls, SD News, Weather, Sports

First of the year could bring "Dairy Cliff," nearly doubling the price of a gallon of milk

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The looming Fiscal Cliff has many of us concerned about higher taxes, but the first of the year could cause even more problems for Americans if Congress doesn't reach a deal.  

A big one for a lot of consumers and South Dakota Farmers is something many are now calling the "Dairy Cliff."   

It's a farm bill program that will expire on the first and could cause the price of a gallon milk to jump to $7.00 or even $8.00 a gallon. 

Billions of dollars in federally funded farm programs will expire the first of the year.  If nothing is done before then, Congress will be forced to operate under antiquated programs like the dairy price support program that originated back in 1949. 

The program was created to ensure dairy producers receive a standard payment for their milk; however, the 1950s standard would force Congress to pay dairy producers nearly twice the current market value for milk. 

"This means 100 pounds of milk that we're selling now at $21 could go anywhere to $38 and up, according to what we've read and heard on the radio," said Greg Ode. 

The Ode's have been dairy farmers for the past 50 years.  In all those years the dairy farm has seen a lot of changes in technology.  The 1949 legislation does not account for those changes. 

While this legislative mishap could mean a momentary gain for dairy producers, they don't want to see that kind of jump in prices. 

If the price of milk gets too high, dairy farmers are wondering how much of their product will still be in demand. 

"Then you think, nobody is going to want to spend 7,8 dollars a gallon at the grocery store for milk...if the milk price goes to $7.00, its a supply and demand deal, well are people going to buy it or not?" said Ode. 

But many consumers say milk is a commodity they can't live without. 

"If milk goes up, I'll still buy it, my daughter needs it, I like it, and its just something that, I guess the price is like gas, people will buy it," said dairy consumer Todd Fletcher. 

Ode hopes all consumers will feel that way, but until the first of the year comes, he'll just have to wonder what it will bring. 

"That's a good question, I don't know, I mean we as producers don't know what's going to happen," said Ode. 

Small, family-run dairy operations like the Odes cost a lot to keep up.  Any changes in supply and demand or a momentary loss of income would make a huge impact.   

It's just one more thing looming overhead as we wait to see if Congress can make some kind of solution by the end of the year.

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