White house cites MILC increase in farm bill veto threat.

Efforts to pass a new farm bill have stalled in the U.S. Senate for the past two weeks over procedural disagreements between Republican and Democratic party leaders, raising the prospect that enactment will be delayed until next year.

Senior advisers to President George Bush complicated the congressional negotiation last week with a broad threat to veto the legislation if it were to increase taxes, expand agricultural trade with Cuba and raise farm supports for a number of commodities including milk and sugar.

Sugar provisions in the bill approved by the Senate Agriculture Committee's last month "would dramatically increase the cost of the program," the White House said in a statement. "The Administration strongly opposes these changes to the sugar program."

It also objected that the bill would increase the payment rate for the Milk Income Loss Contract (MILC) program and increase the quantity of milk that is eligible to receive MILC payments. "These increases likewise do not signify reform, result in more market distorting policy, and increase government costs," it said.

However, the National Milk Producers' Federation (NMPF) supports the bill's revised dairy price support program. After the first year of the five-year bill, the Senate version of the Farm Bill raises the MILC payment rate from 34% to 45% of the difference between $16.94/100 lbs, and the monthly Class I milk price in Boston (which was the original payment when the MILC was created in 2001). It also raises the annual milk volume qualifying for MILC payments, from 2.4 million lbs to 4.1m lbs after the first year.

Meanwhile, International Dairy Foods Association said it was disappointed with the higher payment rate and increased volume of milk production eligible for MILC payments and expressed concern with a requirement for daily mandatory dairy product price reporting as "unnecessary and unduly burdensome."