MILC program expires

SALEM, Ohio – Dairy farmers are officially on their own.
The price support program, which kept their milk checks coming even when prices dropped, expired Sept. 30.
Over the last three years, the Milk Income Loss Contract program has doled out more than $2 billion to U.S. farmers.
In Pennsylvania alone, more than $180 million was handed to farmers when prices dipped below $16.94 a hundredweight.
Although the program ran out at the end of September, many hoped it would be included in the agricultural appropriations bill and extended until the 2007 farm bill.
Commitment? As recently as mid-August at Pennsylvania’s Ag Progress Days, U.S. Agriculture Secretary Mike Johanns said he was committed to continuing the program through 2007.
But then came Hurricane Katrina and a $200 billion relief package.
This means it’s a whole new fiscal environment, said Ken Bailey, Penn State dairy economist.
Will they make it? It’s not to say MILC won’t be tacked onto other legislation sometime before the next farm bill, but Bailey thinks farmers will be able to pull through even if they do have to wait.
Milk prices are strong now but they’re expected to drop in early 2006. Even so, Bailey said he doesn’t think they will fall below the $16.94 per hundredweight support level that MILC provided.
There’s a strong, balanced demand for milk now that’s keeping prices up, he said.
According to USDA’s Farm Service Agency, farmers haven’t been eligible for MILC payments since June when the rate was just over 3 cents per hundredweight.
Payments were much higher in spring 2004, when the base price fell to $11.39.
Although Pennsylvania ranks third in the nation when it comes to these payments, Ohio has also benefited. Almost $128 million was paid to Ohio dairy farmers.
Division. Farmers are divided about where they stand with MILC, Bailey said, and that makes it hard for them to pressure Congress.
It’s seen across the country and also within Pennsylvania, he said. Because MILC payments are limited to a farm’s first 2.4 million pounds produced, larger operations don’t benefit as much as smaller ones.
But this is also what makes the program work, Bailey said. This cap keeps the program from encouraging farms to overproduce and expand.
Other options. Although Ohio Dairy Producers doesn’t have an official stance on the milk program, Director Tim Demland said it’s never good when money is taken away from dairy farmers.
But he’d still rather see producer-led programs, like Cooperatives Working Together, helping farmers instead of the government.
If there was even more involvement in CWT, perhaps the dairy industry would be able to handle itself and it wouldn’t need MILC, he said.
In the meantime, however, if farmers are worried about their milk checks, they can forward-contract, Bailey said.
(Reporter Kristy Hebert welcomes feedback by phone at 800-837-3419, ext. 23 or by e-mail at khebert@farmanddairy.com.)

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