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Bush's Budget Contains Measures for Dairy Program Efficiency

Feb 06, 2006

Bush's Budget Contains Measures for Dairy Program EfficiencyCongress Passes MILC; IDFA Will Push for House Passage of MREA

President Bush released his fiscal year 2007 budget today, which proposes additional cuts in federal spending, including to agricultural programs. Specific to dairy, the proposed budget would increase spending for food and farm safety and security; preserve funding for the Women, Infants and Children (WIC) program; and require more restrained commodity spending and program efficiencies — all proposals that IDFA supports. The budget would reduce payments from all commodity programs — including the Milk Income Loss Contract (MILC) — by 5%, initiate a sugar marketing assessment to be paid by sugar processors, require that the Dairy Price Support Program be run more efficiently, and initiate an assessment to be paid by dairy producers to help fund government dairy programs. More analysis of the proposed budget is forthcoming.

"IDFA is pleased that the president recognizes that current dairy subsidy programs work at odds with each other and can be run more efficiently — we urge Congress to follow the same path and to work for changes that make dairy programs more efficient."

In fact, Congress just last week passed the budget reconciliation bill, which included a two-year extension of a modified MILC program. Even the slimmed down version of MILC, which IDFA opposed, is expected to cost taxpayers about $1 billion over two years.

"Passage of the new MILC underscores the need for change — such as that in the president's proposed budget — so that our dairy subsidy programs are not counter-productive," said IDFA Senior Vice President Chip Kunde. "The U.S. Department of Agriculture has already noted that MILC works at odds with the existing Dairy Price Support Program — we have to support change now and in the upcoming Farm Bill."

The original MILC program, which began in 2002 and expired last Oct. 1, paid out about $2 billion to dairy farmers. Under the program, when prices fell below a baseline level, the federal government covered 45% of the difference for farmers. Under the renewal, the rate drops to 34%. The extension is retroactive to Oct. 1, though prices were too high to trigger any payments for October and November.

As Congress takes up review of Bush's budget, another immediate congressional priority for IDFA and a broad coalition of producer and processors will be passage of the Milk Regulatory Equity Act (MREA). The MREA closes regulatory loopholes that have allowed unregulated milk to take markets away from dairy producers and processors in regulated areas. The legislation has the support of producers and processors nationwide. The bill passed the Senate last year, and IDFA will work for quick passage of the bill in the House.

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Posted February 6, 2006

Dairy Delivers