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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the 2008 farm bill Dec. 31 require USDA to “revert to outdated, underlying laws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
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
“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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