House prepares three 'milk cliff' bills

House leaders have prepared three bills to deal with the looming "milk cliff" for floor action this week.

The three bills are aimed at preventing a spike in dairy prices looming in the new year. 

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Because Congress has failed to renew farm programs, an underlying 1949 law is slated to kick in. This would force the government to buy up American milk at inflated prices and the purchases are expected to possibly double the price of milk at the grocery store as supplies dwindle.

Late Saturday night, House Republicans posted the three bills on the House Rules Committee website, setting up possible Monday votes under layover procedures put in place in this Congress.

One bill would extend the expired 2008 farm bill, which expired Sept. 30, for one year. The second would provide for a farm-bill extension through January and a third would just extend dairy programs through January.

"Clearly, it is no longer possible to enact a five-year farm bill in this Congress.  Given this reality, the responsible thing to do – and the course of action I have long encouraged if a five-year bill was not possible – is to extend the 2008 legislation for one year. This provides certainty to our producers and critical disaster assistance to those affected by record drought conditions," said House Agriculture Committee Chairman Frank Lucas (R-Okla.) in a Sunday statement. 

"The legislation posted is the result of discussions with Ranking Member [Collin] Peterson [D-Minn.] and my colleagues in the Senate.  It is not perfect – no compromise ever is – but it is my sincere hope that it will pass the House and Senate and be signed by the President by January 1," he added.

The first bill abolishes existing dairy price supports in favor of a reformed system included in House and Senate draft farm bills that failed to pass both houses this year. The new dairy system is aimed at guaranteeing profit margins rather than supporting prices and is favored by milk producers who argue that the rising cost of inputs like feed makes the existing system too weak for dairy farmers.

The dairy changes may face significant opposition in the House. This summer Speaker John Boehner (R-Ohio), long a farm bill skeptic, described existing dairy programs as "Soviet-style." The changes may be key to getting House Agriculture Ranking Member Collin Peterson (D-Minn.) and other rural Democrats to support a one-year extension, however. Peterson was instrumental in killing a one-year extension when House leaders tried to pass one in July.

Peterson instead favored a five-year bill that appears all-but-dead in this Congress. 

"These reforms are the primary reason that I am even willing to consider any extension." Peterson said Sunday, regarding the dairy program changes.

The Senate passed such a bill, as did the House Agriculture Committee, but the House never brought it to the floor. The House 2012 farm bill faced opposition from conservatives opposed to farm subsidies and liberals opposed to the $16 billion in cuts to food stamps contained in the House bill. 

On Friday, Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) revealed to reporters that she was bowing to reality and working on a 2008 farm bill extension instead of continuing to push for a five-year bill to be included in a "fiscal cliff" grand bargain.

Lucas and Stabenow had hoped that the $23 billion to $35 billion in deficit savings in their farm bills could have been used as part of a broad debt deal to avoid the $500 billion in tax increases and spending cuts looming in January. It now appears that a mini-deal on the fiscal cliff focused only on turning off some of the tax increases will appear this week. 

“If a new farm bill is not passed in the next few days, Agriculture Committee leaders in both chambers and both parties have developed a responsible short-term farm bill extension that not only stops milk prices from spiking, but also prevents eventual damage to our entire agriculture economy. It is critical that we pass a five-year farm bill that gives farmers and ranchers the certainty they need to plan for the future. If a new farm bill doesn’t pass this Congress we’ll soon hold another mark-up and just keep working until one is enacted next year," Statebnow said in a statement Sunday.

Updated at 5:54 p.m.