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MILC Expiration Offers Opportunity for Fresh Look at Dairy Programs With the expiration of the Milk Income Loss Contract (MILC) program on September 30, IDFA is urging the dairy industry to unite behind a strategy that focuses on creating a policy structure that promotes innovation and growth for producers and processors.The MILC program was created in 2002 in an attempt to revive the failed Northeast Interstate Dairy Compact. The payment rate provisions of this direct payment program are the same as the compact; the program pays dairy producers on the first 2.4 million pounds of milk when fluid milk prices fall below the Class I price in Boston (the same trigger price for the compact region). The target price of $16.94 per hundred pounds (11.6 gallons) of milk in Boston is more than $1 higher than the average of the past five years. "The expiration of MILC presents an ideal opportunity for all of us to take a broader look at the complex web of federal dairy programs and to create a framework that is national in scope, less market disruptive, fiscally responsible and compliant with U.S. trade obligations," said IDFA Senior Vice President Chip Kunde. From the outset, MILC was a program that divided dairy producers along regional lines and frequently disrupted the market. A report to Congress last year by the U.S. Department of Agriculture also found that the MILC program worked at cross purposes with the Dairy Price Support Program, prolonging milk price slumps. The report concluded that these two dairy subsidy programs were incompatible and actually lowered the price paid to producers for their milk by 3%. "The MILC program was formed on many of the same market-distorting principles as regional dairy compacts," said Kunde. "As we prepare to reauthorize the Farm Bill in 2007, now is the time to look forward for creative and fair solutions, not backwards towards failed programs like MILC or dairy compacts." The MILC program was in effect for 46 months and resulted in government payouts in 26 of those months. The payments varied from as much as $1.82 per hundred pounds of milk to as little as $0.03 per hundred pounds of milk. MILC dramatically increased the financial burden dairy programs have placed on the federal budget, costing more than $2 billion since its inception. Efforts to renew MILC by some members of Congress are expected to persist until Congress adjourns in November or December. IDFA will continue to promote policies that encourage growth and innovation and enhance the business climate for the entire dairy industry. For more information, contact Kristin Pearson Wilcox at (202) 220-3508, kwilcox@idfa.org.
Posted October 3, 2005
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