Ag deal put off over milk program extension

10/07/2005

Fred Frommer,
Associated Press
October 7, 2005

WASHINGTON—The Senate Agriculture Committee put off a vote on a farm spending plan Thursday because of some senators’ objections to extending the Milk Income Loss Contract program.

“Right now, we are in danger of losing this program,’’ said Sen. Norm Coleman, a Minnesota Republican who serves on the committee.

The program, known as MILC, pays dairy farmers when prices fall below a certain level. It expired last week.

The Agriculture Committee was set to vote on a plan to cut agriculture spending by $3 billion, including a provision to extend the MILC program for two years at reduced levels.

“Some committee senators said they were concerned at the cost of extending the MILC program at the expense of other commodity programs,’’ said the committee’s chairman, Sen. Saxby Chambliss, R-Ga., in a statement.

“There is strong support for this countercyclical dairy program among both parties within this committee, but it does not appear there is the support that is necessary.’’

Sen. Pete Domenici, a New Mexico Republican who chairs the Energy and Natural Resources Committee, told Senate leadership he will not support some other key votes if MILC is included in the farm package, said his spokesman, Matthew Letourneau.

The MILC program paid farmers only on their first 2.4 million gallons of milk each year, which translates to about 120 cows. That made the program popular in the Midwest and Northeast, which tend to have smaller farms, but not so popular in the West, home to much larger dairy operations.

Some of those farmers say they not only don’t benefit from MILC, but that the program hurts them by subsidizing smaller operations and putting more milk on the market.

“The MILC program is a bad deal for New Mexico,’’ Domenici said in a prepared statement. “Our producers are getting left out of this multibillion dollar program, which favors dairies that are not as efficient as the ones in our state.

“Those who want to get serious about eliminating government waste should look no further than this bloated, unfair and ineffective program,’’ he added.

The taxpayer-funded program has paid out a little more than $2 billion to dairy farmers since its inception in 2002, including $162 million to Minnesota farmers.

Because the program pays farmers only when prices are low, very little of that has come in the past two years, when prices have been above average. The program’s expiration has had no immediate effect because prices have been too high to trigger any payments in October.

When prices fell below a baseline level, the program paid dairy farmers cash to cover 45 percent of the difference. Under the Agriculture Committee plan, that rate would be reduced to 34 percent. The MILC program would also be reduced 2.5 percent, along with other farm programs.

Sen. Mark Dayton, D-Minn., said he will introduce an amendment to restore full funding to the MILC program by capping farm subsidies at $250,000 per farmer.

Even as supporters of the program were rallying to save the program at the lower levels, Dayton said that was unacceptable.

“As far as I’m concerned, the president has an obligation to keep his promise,’’ he said. “I consider this to be a failure.’’

During a campaign appearance in Wisconsin last year, President Bush endorsed the program and called on Congress to renew it, but Congress adjourned for the year without doing so.

Coleman said that in tough budget times, everyone has to take their lumps.

“There’s no guarantee that everything will be funded at the same level,’’ he said.

“The issue is whether we keep it in there at all. I’m not hearing many (dairy) folks nitpicking the level. I’m trying to hold it all together.’’