So you've heard of the fiscal cliff, but how about this dairy cliff? Well, it seems that back in simpler times -- the 1940s to be exact -- the government was concerned that dairy farmers wouldn't have incentive enough to produce milk for a thirsty nation. So our great nation passed a law decreeing that as much milk as farmers could make, the government would buy for something more than the cost of production, just to make sure the milk got made at all. Except, when this law was passed, the 'cost of production' was the cost of individual farmers going out and hand-milking each cow, on a stool, into a bucket. Nowadays, naturally, things are for more automated, and though those modern milking machines cost a pretty penny, they still provide immense savings over the cost of hand-wringing lactate from the bovine teat. So, if ever this law were to kick in, the government would be obliged to buy all the dairy output of the nation for the inflation-adjusted 1940s cost of production-- about six bucks a gallon, which is quite a bit more than the going supermarket rate for this commodity.

But, thankfully (for dairy consumers), every year our ingenious Congress passes a Farm Bill which sagely suspends the operation of this insane provision for that year. Except -- whoops!! -- this year's incomprehensibly dysfunctional mix of grandstanders hasn't gotten around to passing that annual farm bill. So come January 1, 2013, dairy prices will skyrocket and public funds will be squandered as the government fulfills its congressionally imposed milk-buying obligation. The price of American-made dairy products will double overnight, since American farmers will be enticed to sell to the government, though cheap dairy goods might flood in from Canada, Mexico, even Europe (but, oddly, not Asia, where dairy has never made a large enough dent in local cuisine options to generate an industry). And what will become of all the milk bought by the government? Well, it's not steel we're talking about here. Milk spoils. Watch for it.

And why, you may ask, was this law passed in the first place? Simple. The USA used to have a much more diffuse dairy industry, with hundreds of thousands of dairy producers instead of tens of thousands today (incidentally including a few behemoth corporations). And why has this stupid, stupid law stayed on the books well past its obsolescence? oh that's easy. It's to make sure Congress takes care to pass a Farm Bill every year.

Update: On the eve of going over the fiscal cliff, Obama and Congressional leaders met to discuss the impending crisis; reportedly, amongst the topics discussed was the dairy cliff, with the idea put out of essentially punting the issue down the road for a few months or a year by passing a continuation of existing agricultural policy. Being a comparatively smaller measure, this might well be one of the pieces which gets taken care of before the start of the new year.

Update 2: This was rolled into the fiscal cliff bill and done away with at last.

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