Dairy price program set to expire

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(Host) A key milk price support program expires next year and Vermont’s congressional delegation is struggling to renew it. But last week, Congress refused to include the measure in a major spending bill. That leaves the issue for the next Congress. And Vermont Agriculture Secretary Steve Kerr says the national budget deficit will make it hard to find the votes.

VPR’s John Dillon reports:

(Dillon) The financial safety net for many Vermont dairy farmers is called the Milk Income Loss Contract. It provides a pay-out when wholesale prices fall below a certain trigger level.

The program expires next September. Senator Patrick Leahy tried to renew the program by including language last week in a must-pass spending bill. Vermont Agriculture Secretary Steve Kerr says the effort failed.

(Kerr) “I was there Wednesday, and they lined up all their ducks, they’d done their homework. But it turns out the votes just weren’t there. As I understand all of the Democrats on the Senate side were looking to support it, and they were looking for a Republican to support it and one did not materialize.”

(Dillon) Kerr says that Pennsylvania Republican Arlen Specter said he supported the measure, but then failed to vote for it. Specter has been courting Republican leadership as he seeks to retain the chairmanship of the Senate Judiciary Committee.

With the milk program dead for this Congress, the measure will come up for consideration again next year. But Kerr says it will be an uphill battle because of the looming budget deficit.

(Kerr) “Next year, I’m told that any program that of course creates new spending is of course going to have to find savings in some other program.”

(Dillon) The federal government has paid out about $2 billion to dairy farmers for payments that were retroactive to December 2001. Vermont farmers got about $45 million under the program.

Milk prices flow up and down in cycles. Prices are relatively strong now, but are expected to fall in 2006, just as the program expires.

(Kerr) “What will be truly tragic is that the expiration of the MLIC program just at the time the dairy business cycle is turning to the negative. We probably don’t need MLIC much next year. We may very well need it in 2006.”

(Dillon) Kerr points out that the Northeast dairy compact required dairy processors, not the taxpayer, to support prices. The compact expired several years ago and Congress failed to renew it. Kerr says the budget deficit should make the compact more attractive.

(Kerr) “It may be that the new budget conundrum causes Congress, causes the administration to re-look at dairy policy, re-think this opposition. That said, the politics in the dairy industry haven’t changed a whole lot. Those folks in the upper Midwest who don’t like the compact still don’t like it.”

(Dillon) Kerr says the best hope for dairy farmers may lie with a campaign promise President Bush made this fall. Campaigning in the Midwest, Bush vowed to support the renewal of the Milk Income Loss Contract program. The president’s promise, however, has yet to be fulfilled by Congress.

For Vermont Public Radio, I’m John Dillon.

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