Dairy industry group says secretary can delay milk price hike

By Jim Webster

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, D.C., Dec. 27, 2012 - The International Dairy Foods Association says that Secretary of Agriculture Tom Vilsack has options to avoid or delay the effect of a 1949 law that could drastically raise milk prices. It suggests legal options that would forestall the consequences of adopting parity as the basis of milk price supports due to congressional inaction on a farm bill.

 In a letter to Vilsack today, IDFA President Connie Tipton says that the secretary has authority to circumvent the law's immediate impact on milk markets and give the new Congress time to finish a farm bill after it convenes Jan. 3. Expiration of authority in the 2008 farm bill Dec. 31 require USDA to “revert to outdated, underlying laws that don't reflect current market conditions or international trade in dairy products,” IDFA said.

Tipton sent Vilsack a memorandum from long-time IDFA counsel Steven J. Rosenbaum of Covington & Burling that provides a legal basis for the procedures described earlier this week by Cornell agricultural economist Andrew M. Novakovic that would require several weeks for USDA to implement provisions of the Agricultural Act of 1949 before it would affect prices.

 First, USDA would need to withdraw current regulations that support the prices of cheese, butter and non-fat dry milk at levels established by the 2008 farm bill. It next would have to issue new regulations to describe which products that USDA would buy to maintain milk prices at 75 percent of parity - now estimated at $39.08 per 100 lbs, Rosenbaum says. He also suggests that Vilsack “should explore power to reduce 1949 act milk support” under authority of a later statute that provides for reduction in the farm price of milk for commercial use.

 “Because the USDA does not have regulations on the books to implement the old law, the agency will need to develop new ones using a process that could take several weeks or months,” IDFA says.

 “Although a sudden and unpredictable increase in milk prices may result in a short-term financial windfall to dairy producers, the immediate implementation of the 1949 Act would dramatically increase government spending, would force consumers to pay significantly more for dairy products and would impose long-term damage to the dairy industry,” IDFA's letter says.

 “In the event that no action is taken by Congress prior to the end of the year, we urge you to consider other legal authorities that are available to mitigate the impact of the 1949 Act. If you conclude that you are required to proceed with implementation, we urge that you proceed in a thoughtful and deliberate manner using the formal rulemaking process,” it adds. IDFA points out that such a schedule would allow producers, processors, food manufacturers, retailers, consumers and others to give USDA their ideas before implementation of a new rule.

 “The secretary of agriculture has ample authority to postpone and even avoid any negative impact of a delay in passing a new farm bill, and we expect USDA will take careful and deliberate actions to avoid short-term market disruptions,” Tipton writes.

 

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