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Proposal to Restart MILC Stalls in Senate Agriculture Committee After the expiration of the controversial Milk Income Loss Contract (MILC) program on September 30, a new version of the subsidy program was introduced last week as a part of a legislative package designed to make mandatory agriculture spending cuts. However, the bill stalled in the Senate Agriculture Committee due to the inclusion of the MILC provision.In an October 6 statement, Senate Agriculture Committee Chairman Saxby Chambliss (R-GA) said that a number of committee members had expressed concern about cuts to other commodity programs to fund the MILC program, leaving the package without enough votes to pass out of committee. The Senate Agriculture Committee is required to cut $3 billion in agriculture spending over the next five years, as part of the overall congressional budget-cutting goal of $34.7 billion. The committee's budget-cutting proposal would have resurrected the MILC program at an estimated two-year cost of $998 million, increasing the cost of dairy programs while cutting nutrition and conservation programs as well as other commodity subsidies. As proposed, the new MILC program would subsidize farmers at a rate of 34% of the difference between $16.94/cwt and the monthly Boston Class I price on the first 2.4 million pounds of milk production from each farm per year. The previous MILC program paid farmers 45% of the difference. "Even with the minor changes to the payment levels, the MILC program remains a costly and regionally divisive program," said IDFA Senior Vice President Chip Kunde. "Given the opposition to the 'new' MILC program and the need for less government spending overall, now is the time to look for greater fiscal restraint on dairy programs." For instance, IDFA supports a proposal in President Bush's FY 2006 budget calling for improvements in the way the U.S. Department of Agriculture (USDA) manages the Dairy Price Support Program. Specifically, the president proposed requiring USDA to make more regular adjustments to the purchase prices of butter and nonfat dry milk powder to achieve a support price of $9.90 per hundredweight (known as the "butter-powder tilt"). The Congressional Budget Office has estimated that better fiscal management of this support program would save the government an additional $400 million over five years. The House of Representatives and Senate must complete the budget reconciliation process by October 26. IDFA will continue to promote policies that encourage growth and innovation and enhance the business climate for the entire dairy industry. For background information on the MILC program, click here.
Posted October 10, 2005
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