Proposed War Spending Bills, Separate House Bill Would Extend MILC Funding

Committees in the U.S. House of Representatives and the U.S. Senate last week passed emergency supplemental spending bills for Iraq war costs that included funding to extend the Milk Income Loss Contract (MILC) program. Separately, Rep. Kirsten Gillibrand (D-NY) introduced a bill in the House that would reauthorize and expand the MILC program in the 2007 Farm Bill and establish a Class I price floor.

The House Committee on Appropriations, chaired by Rep. David Obey (D-WI), passed a supplemental war funding bill that extends the MILC program at the current rate until September 30, 2008. The total cost of the proposed one-year extension is $283 million.

The Senate Appropriations Committee also passed an emergency war spending bill that was amended by Senator Pat Leahy (D-VT) to secure funding for MILC for an additional month, through September 2007. Under the Senate version, the amendment also sets aside additional funding for the 2007 Farm Bill that could be used for MILC, if it is reauthorized.

Each version of the supplemental war spending bills included approximately $4 billion in disaster aid for agriculture.

The MILC program currently is set to expire this year at the end of August. The cost to extend the MILC program in the 2007 Farm Bill would be $1.2 billion through 2012; however, with current rising milk prices, few payments would be expected for farmers under the MILC price trigger of $16.94 per hundredweight.

As a next step, the House and Senate will have to pass the bills and conference to create the final version. President Bush has threatened to veto the bills.

"We believe there needs to be money in the Farm Bill budget for dairy," said Chip Kunde, IDFA senior vice president. "With it, we stand a better chance of resolving the conflicting nature of existing dairy subsidy programs, and avoiding the reemergence of failed dairy policy, such as regional compacts, that take money out of the pockets of processors and consumers."

In related news, Rep. Kirsten Gillibrand (D-NY) introduced a bill (H.R. 1583) last week that would extend the MILC Program through fiscal year 2012. Rep. Gillibrand serves on the House Agriculture Committee and is a member of the Livestock, Dairy and Poultry Subcommittee.

The bill would increase the current cap on MILC payments from 2.4 million to 4.8 million pounds of annual production and restore the payment rate back to 45% of Class I utilization from the current level of 34%. The bill also would establish a minimum price for Class I milk under the Federal Milk Marketing Orders at no lower than $15.58 per hundredweight.

IDFA opposes H.R. 1583 because it would distort markets and prevent milk from moving to its highest value use.

Posted March 26, 2007