Congressional Wrap-Up: No Movement on Major Dairy Issues in Final Actions

Technically, the 108th congressional session is not over because of a last-minute discovery of a controversial provision that would allow House and Senate Appropriators to view taxpayers' individual tax returns. Congressional leaders must now remove that provision, and the House Representatives is expected to vote on the corrected bill on November 24. In addition, the House plans to return in December to try to complete the intelligence overhaul bill.

In the omnibus appropriations package, U.S. agriculture programs received $83.3 billion overall. In light of renewed worries over bovine spongiform encephalopathy (BSE), food safety agencies were among the few given more rather than less money for fiscal year 2005.

Specifically for dairy, the appropriations bill did not contain an extension of the Milk Income Loss Contract program (MILC), which had been inserted in the Departments of Veterans Affairs and Housing and Urban Development appropriations bill. As reported previously by IDFA, the MILC program had become a hot topic during the presidential campaign. MILC is set to expire September 30, 2005.

"We were successful in working with House and Senate allies to ensure that the MILC extension was stripped from the bill before final passage," stated IDFA Senior Vice President Chip Kunde.

IDFA believes the MILC extension is bad dairy policy that would cost taxpayers $2.4 billion. There will undoubtedly be an attempt next year by Senators. Herb Kohl (D-WI), Norm Coleman (R-MN) and Patrick Leahy (D-VT) to reauthorize the program. However, they will face an uphill battle as Congress will focus on budget reconciliation next year. IDFA will continue to oppose the program's reauthorization.

Other dairy policy issues that were pending on the congressional agenda included the tariff bill on imports of milk protein concentrates (MPCs), caseins and caseinates; the National Dairy Equity Act (NDEA), which would create a new national dairy compact; dairy forward contracting; a producer-handler exemption; and closing the out-of-state milk sales loophole.

Legislation to impose additional tariffs on imported MPCs, caseins and caseinates gained considerable congressional support during the year, but the U.S. Coalition for Nutritional Ingredients — an IDFA-led group of more than 50 associations, food companies, and taxpayer and consumer organizations — strongly opposed the bill and prevented them from moving through House or Senate committees. IDFA was also victorious in stopping any movement of the NDEA that would have created a new dairy compact.

"Once again, IDFA won the battle against dairy compacts. We will continue to urge Congress to reject this new national dairy compact scheme," said Kunde.

IDFA can celebrate many victories, because Congress rejected several misguided dairy policy proposals this year. However, at the same time, IDFA believes that Congress missed several opportunities to create good dairy policy, such as when Congress failed to make the dairy forward contracting pilot program permanent or address the costly and growing market distortions caused by the producer handler exemption and the out-of-state milk sales loophole. IDFA was a strong supporter of these legislative actions.

On forward contracting, due to congressional inaction, dairy farmers will not be able to forward contract with proprietary plants after December 31.

"The forward contracting program was supported by thousands of dairy producers and processors, the U.S. Department of Agriculture and the Chicago Mercantile Exchange, as well as agriculture lenders and leading dairy economists. IDFA is disappointed that producers and processors will be denied the use of this proven, voluntary risk management tool that costs the federal government nothing," noted Kunde. Regarding the producer handler exemption or closing the loophole on out-of-state milk sales, IDFA joined other dairy industry organizations to urge Congress to pass legislation addressing these issues expeditiously to prevent the potential misuse of the federal and state order system and thereby eliminate market disparities (especially in the western United States.)

Despite these unsuccessful measures, IDFA believes that dairy priorities have moved forward in the past year, particularly the passage of the IDFA-supported Child Nutrition Act. This legislation, which became law this summer, contained two important provisions that will expand milk's availability to American schoolchildren.

"IDFA members can be proud of our industry's success in the 108th Congress," said Kunde. "On balance, we had a very successful year. We look forward to working with the 109th Congress when it convenes in January 2005 to enact policies that will help the entire dairy industry — producers and processors — innovate and grow."

Questions can be directed to IDFA Legislative Group at 202/737-4332.

Posted November 22, 2004