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Legislation Introduced to Extend Current MILC Subsidy On February 7, Senator Rick Santorum (R-PA) introduced a bill (S. 307) to extend the Milk Income Loss Contract (MILC) subsidy program for two years, through September 30, 2007. An identical bill (H. 859) was introduced in the House of Representatives last week by Rep. Collin Peterson (D-MN), with 14 co-sponsors. Unlike the legislation introduced earlier this month by Senator Norm Coleman (R-MN), the Santorum/Peterson legislation does not alter the volume cap within the MILC payment formula.As previously reported in News Update, the White House included a two-year extension of MILC as part of the budget submitted to Congress. IDFA has expressed opposition to the MILC extension, because the program is costly and divisive. MILC is formulated so that it discriminates between small and large farms, in fact penalizing larger, more efficient farms by holding production higher and prices lower than if market signals were triggering production decisions. It also co-exists with another safety net program, the Dairy Price Support Program, which requires the government to buy dairy products that are surplus of the market at set prices. The combination of these programs not only creates market distortions by signaling inappropriate production decisions relative to market demand, but it also results in far greater government expenditures than a single, more efficiently structured program. "We urge Congress to reject an extension of MILC and, instead, begin a review of current dairy programs in order to put in place national dairy policy that is fair to all farmers, meets our needs to reduce the federal budget, and complies with world trade obligations," said Chip Kunde, IDFA senior vice president. Under the terms of the Santorum/Peterson legislation, MILC would maintain its current cap contained in the subsidy payment formula at 2.4 million pounds per year -- a level that has cost American taxpayers more than $2 billion since 2002. The Coleman bill (S. 273) seeks to double that cap, to 4.8 million pounds annually. (For more on the MILC expansion legislation, click here.) IDFA encourages its members to contact their local congressional representatives now to express opposition to extending or expanding MILC. To assist with this process, IDFA is offering a sample letter that can be downloaded by clicking here (.doc) or sent via IDFA's online e-advocacy tool by clicking here.
Posted February 22, 2005
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