MILC program reauthorization to face changed budget picture.

The federal government's supplemental milk income loss contract program is scheduled to expire Sept. 30, the end of the 2005 fiscal year, and observers are predicting an uphill battle for supporters who are seeking a continuation of the controversial support program. The MILC program was created as part of the 2002 farm bill and since it has been effect, it has provided dairy farmers with approximately $2 billion in payments made when domestic milk prices fall below a specified level. Unlike previous dairy assistance programs, the MILC program provides multi-year assistance directly to dairy producers, regardless of geographic location or end use of their milk.

Last year, Sen. Herb Kohl (D-Wis.) and Reps. Collin Peterson (D-Minn.) and Don Sherwood (R-Pa.) introduced legislation in their respective houses of Congress that would have extended the program through 2007. That proposal died twice, once as a stand-alone bill and again when it was added as an amendment to the ag appropriations bill but dropped before the full measure passed.

The MILC program provides assistance mostly to small-scale farmers. Because the program pays farmers only on their first 2.4 million gallons of milk production, it is geared to operations with 120 or fewer cows. This makes MILC popular in the Midwest and Northeast, but generally unpopular in the West, the home of a disproportionate number of mega-dairies. This geographic split plus the large-vs-small operator fight will make it difficult for legislators to extend the program without first providing substantially more money than previously allocated for MILC. And providing substantially more money is not what the 109th Congress is likely to be about.