Stilly -

The "milk cliff" is from a program to keep prices UP, not down.

Originally set up when costs of milk production were much higher, if the farmers can't sell the milk for at least the "support price" the Fed is REQUIRED to offer to buy a certain amount of it at a preset (high) price.

With current production methods, the market has resulted in retail milk prices of around $3.50/gallon, which means the producers are selling the "raw milk" for some lesser amount; but if a "temporary hold" on government purchases expires, the gov will be forced to offer to buy it at a higher price. If the farmer can sell to the government for $5/gal, they're unlikely to sell it to the processors/distributors/cookie makers for $2.50. The milk users will have to match the "support price" in order to get any milk at all, which will give the cows lots of profit unnecessarily and once again will stick everybody who drinks milk or makes cheese or cookies with higher prices.

The REAL somewhat disguised threat is that foreign suppliers who can't sell to the US gov't but can sell to US buyers/distributors will move into the US markets and drive all our own dairy farms out of business if the "milk cliff" isn't quashed.

The farmers generally recognize that while the milk cliff would give them a temporary profit, it likely would drive them all out of production fairly quickly, since the amount of milk the gov is required to buy is a fraction of current production. Some cows will get rich, but others will have to compete in an extremely "distorted" market.

John