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Milk Prices Could Soar to $8 a Gallon as U.S. Nears "Dairy Cliff"

Dairy prices could skyrocket if Congress doesn't act soon.

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    If new legislation is not passed, the U.S. could go over a "dairy cliff" that could boost milk prices to $8 a gallon.

    An $8 gallon of milk? That's what you could be seeing at the supermarket, if Congress doesn't pass a new farm bill soon.

    Why the possible jump off the so-called "dairy cliff" and potential price hike? The farm bill from 2008 — which overrode legislation from back in 1949 — is set to expire at the end of the year, CNBC reported.

    Without a farm bill, the law would revert to the 64-year-old permanent one, which would require the government to buy dairy products at about twice the market rate. That old law was enacted when the dairy industry was far less efficient and far smaller than it is today, NPR explained.

    U.S. Secretary of Agriculture Tom Vilsack told NPR that due to the increased price the government would have to pay, dairy producers would be forced to sell to the government in large quantities — causing shortages in stores and ultimately major price hikes.

    That would hit Americans' wallets hard.

    "In most cases, it's the reason why we've had fairly routine extensions of the farm bill for the past 50 years," he told NPR.

    The deadline to extend the 2008 farm bill comes at the end of the year, and according to Chris Galen, senior vice president of communications for the National Milk Producers Federation, "gridlock on Capitol Hill" is why a vote for a new bill is being pushed to the last minute.

    "It's very similar to the showdown and shutdown we had in October," he told CNBC.

    CNBC reported that if Congress fails to pass a new farm bill, there could be a 9 percent drop in domestic dairy demand, and the dairy export industry could essentially disappear.