A federal program which assisted dairy farmers in times of low milk prices expired Friday, leaving farmers and legislators alike looking to the future for an alternative.
The Milk Income Loss Contract program (MILC) was written into the 2002 Farm Bill and compensated milk producers when the domestic market price of milk dropped below a specific price, or target level. Dairy farmers in the country were paid 45 percent of the difference between the actual price of milk and the target level price.
Since the program began, Wisconsin's dairy producers have been paid nearly $414 million.
State Rep. Barbara Gronemus, D-Whitehall, said dairy farmers' success in the future will now depend directly on the milk market, especially without the MILC program to provide support.
"I think it depends on what happens with the price of milk," Gronemus said. "Farmers will have a really hard time not only if the price of milk is low, but also if the price of fuel doesn't go down soon, especially now that it's harvesting time."
Gronemus said she is disappointed with the way President George W. Bush handled the MILC Program's expiration.
"The president was here in Wisconsin and said he supported it, but he didn't do anything to say to Congress about how important it is," Gronemus said. "During campaign time, people say things and then later, they do nothing about it."
Bush had included an extension to the program in his 2006 budget, but Congress then cut it from the Agricultural Appropriations Bill, which was passed by the U.S. Senate Sept. 22.
However, the MILC program was met with controversy because a cap on the amount of money that could be paid out left larger farmers feeling shortchanged, University of Wisconsin Professor of Agricultural and Applied Economics Ed Jesse said. The cap only allowed compensation payments to be made on up to 2.4 million pounds of milk annually; once a farm produced over that amount, they could no longer receive payments for milk produced that year.
"Most of Wisconsin dairy farmers produce under that amount, so they received full benefits whenever the target price would hit," Jesse said. "That's probably why it was so controversial because areas of the country with very large dairy farms argued that they were not receiving the full benefits, and that there was preferential treatment to certain areas of the country like Wisconsin and Minnesota."
But Gronemus called the MILC Program "multifaceted" and said it not only helped dairy farmers, but also benefited consumers, by ensuring farmers could provide high quality dairy products without an increase in the amount consumers pay for the products.
In addition, Gronemus said the program worked better than other price-support programs and was more accepted by Wisconsin farmers.
"It set a precedent," Gronemus said. "It doesn't make farmers feel as though they're getting welfare."
Jesse said the main reason the program was not renewed is because of this controversy, though there were also economic factors that may have had an effect on the program's renewal.
Though Gronemus said she didn't know of any plan in the works to replace MILC, Jesse said the program could be reinstated in future agricultural legislation as soon as November.
Jesse said though the price of milk had been consistently above the target level for most of the past two years, farmers relied heavily on the program in 2002 and 2003 when the price of milk was especially low.
"I think in the case of Wisconsin, it kept a lot of farmers in business that otherwise might have been forced out," Jesse said. "It does provide a very effective safety net to generate income for farmers when milk prices are in the tank."
