How the Farm Bill Affects What's in Your Fridge
NEW YORK ( MainStreet) Today President Barack Obama signed the farm bill into law. This is a massive piece of "omnibus legislation" that Congress renews roughly every five years, and it touches on almost everything having to do with agriculture or food production. The bill even includes the food stamps program as part of its jurisdiction over all things nutrition.
Although the bill made headlines for its changes to agricultural subsidies and food stamps, you don't have to receive either to feel the effects of the farm bill. In fact this law impacts every American every day, and well, it should -- with a price tag of just under $1 trillion.
For everyone who loves partisan football, the farm bill has already made for some interesting coverage . For the rest of us, here are a few ways today's signing will actually effect each meal of the day.
Breakfast: Milk, Butter, Pastries, Cereal
As it turns out, the federal government plays a surprisingly large role in the price of milk. Under a program called the Milk Income Loss Contract (MILC) Program , the government secures dairy farmers against fluctuations in the market. It compensates farmers whenever the price of milk drops too low or the price of feed gets too expensive, helping to keep them from going out of business or raising dairy prices sky high.
This program keeps the price of milk artificially low by allowing farmers to charge less for their product than it actually costs to make. Currently, dairy farmers generally pay more to feed their cows than you do for a gallon of milk at the supermarket. The MILC Program allows that by making up the difference between those prices.
The MILC Program is necessary, because it suspends a permanent law from 1949 requiring the government to purchase available dairy at double an established market rate. The effect, as intended, would set a baseline price for milk across the country. No grocery store could offer less, since then farmers would just turn around and sell their product to the government.
Without the farm bill these forces could push milk up to $7 a gallon or more, taking with it the prices of butter, cheese, baked goods and your morning bowl of cereal.
Lunch: Hamburgers, Hot Dogs, Ham Sandwiches
One of the ways that the farm bill controls food prices in the United States is through risk management (about which more below), and that includes the price of meat. Through the Livestock Indemnity Program the farm bill compensates farmers and ranchers when natural disasters wipe out large numbers of their animals, such as when a blizzard in South Dakota killed tens of thousands of cattle last year.
Although the farm bill doesn't offset market conditions when a shortage of beef drives up prices, it does make sure that the farmers don't have to cover their losses. Without this insurance a farmer who loses half his herd would have to charge double for each cow. It also keeps them from having to pay for potentially expensive insurance plans and pass the cost on to consumers. Between covering losses and keeping the costs of business down, this program helps make sure your afternoon hamburger is a little less expensive.