Some dairy owners want aid program scrapped

By Tony Parra: PNT Staff Writer

Some local dairy owners would rather the government do away with a program set up to help dairies. They believe it’s hurting the dairy industry and milk market and they’re actively lobbying against the program.

Sen. Saxby Chambliss, R-Ga., chairman of the Senate Agriculture, Nutrition and Forestry Committee, indefinitely postponed a vote scheduled for Oct. 6 on a budget-cutting farm bill, mainly because of problems with one subsidy — the dairy price-support program. Chambliss told The Associated Press he didn’t have enough support to extend the program, called the Milk Income Loss Contract (MILC).
MILC was created to compensate dairy producers when domestic milk prices fall below a specified level authorized by the 2002 Farm Bill. When that price level is in play, the government pays milk producers according to a formula based on the published monthly Boston class I milk price.

When that price falls below $16.94 per hundredweight, payments begin. Individual dairies continue to collect payments until they reach a maximum of 2.4 million pounds, according a U.S. Farm Service Agency online fact sheet.
The rate of compensation each month is computed by multiplying 45 percent of the difference between that month’s BC I price and $16.94.
Congress is discussing whether to extend the program for another five years. The MILC program expired on Sept. 30.
Sharon Lombardi, executive director of the Dairy Producers of New Mexico, said her organization is opposed to the MILC program with a cap, but would support an uncapped program. The DPNM is an agriculture association for New Mexico and West Texas dairy producers and represents them on different levels of the government.

“The dairy producers of New Mexico oppose any form of direct payment upon production,” Lombardi said. “We believe it (MILC) distorts the market because it keeps less efficient dairies in business. The payments are not fair to anybody. It’s not a free market.”

Some local dairy owners agree.

“We believe the dairy industry should be responsible for the milk market and not the government,” said Alva Carter, an eastern New Mexico dairy owner. “The industry does a good job of handling the market. There are things in place to help dairy producers.”

One of those things in place is a fund created by United States dairy owners to buy dairy cows from producers who would like to go out of business, said Carter.

Carter said the fund is created solely on donations from dairy producers.

“We would rather the dairy farmers and demand for milk dictate the market,” said Art Schaap, another eastern New Mexico dairy owner. “The milk should be purchased because of its value.”

AP reported the program is popular in the Midwest and Northeast, which tend to have smaller farms.

Some lawmakers contend the $1 billion program would take money away from other commodities; others argue it’s just bad policy.

“Right now, we are in danger of losing this program,” said Republican Sen. Norm Coleman, an Agriculture Committee member from Minnesota, one of the program’s top beneficiaries.

Sen. Pete Domenici, R-N.M., said MILC favors dairies less efficient than those in New Mexico. A spokesman said Domenici told Senate leaders he would oppose drilling in the Arctic National Wildlife Refuge in Alaska, a priority for President Bush, if the agriculture budget includes the MILC program.

AP reported MILC became an issue in last year’s presidential race, when Democrats used it to challenge Bush’s commitment to dairy farmers in the swing state of Wisconsin. Bush responded by calling on Congress to renew the program during a campaign appearance there, but Congress adjourned for the year without doing so.