Dairy price support program faces uphill battle in Congress

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(Host) President Bush says he supports a milk subsidy program that helps Vermont dairy producers. But his recently released budget would shrink payments to farmers.

Benjamin Shaw has more from our Capitol Hill bureau.

(Shaw) Last October, President Bush was hard on the campaign trail at the end of a heated presidential race. To win last-minute votes, he declared his support for a milk subsidy program Vermont dairy farmers know simply as ‘MILC’ – the Milk Income Loss Contract program. It’s a mouthful, but Vermont lawmakers are not letting the president forget his promise.

The MILC program pays farmers when the price of milk falls below $1.40 per gallon. The program is set to expire in September. But Vermont’s congressional delegation is working hard to extend the program another two years. Vermont Democratic Senator Patrick Leahy admits that will be an uphill struggle, with the USDA putting the price tag at some $1.2 billion. But Leahy says the president’s endorsement makes a two-year extension more likely.

(Leahy) “I think it’s a very important victory having MILC in the president’s budget. I asked the new secretary of agriculture this question very specifically in his confirmation hearing. He assured me he supported that. He and I then had a private conversation, he assured me again. The White House has assured us they do. I think we’re in pretty good shape.”

(Shaw) With over 70 years of combined experience, the Vermont delegation has good deal of clout on the Hill. Leahy has shown that even in a Republican-dominated Congress, he can bring dollars home to Vermont. Last year, over White House objections, he defended an amendment to the Homeland Security budget bill, saving over a hundred federal jobs in St. Albans.

President Bush’s 2006 budget proposes a five percent across the board cut to all farm subsidies. Leahy says a reduction of milk payments by that amount would cost Vermont farmers $1.5 million over two years.

(Leahy) I don’t think that either the president or anybody else thinks the five percent arbitrary cut is what’s going to happen. I think many people are going to look at other ways to have savings.”

(Shaw) Vermont is home to over a thousand dairy farms. Richard Powell owns and runs one of those farms in Williamstown. Last time the price of milk dropped, he got $1,100 – enough to buy two weeks worth of feed for his 30 cows. He’s glad the MILC program exists, even when he’s not getting payments.

(Powell) “Obviously I don’t know what the long range forecasts are for the prices. If the prices are good, we won’t get much from the program. But it’s nice to know it’s there because if the price does drop, there’s a cushion.”

(Shaw) Traditionally Congress has backed crop subsidies and it’s unlikely the president’s agriculture cuts will survive as proposed. Vermont independent Congressman Bernie Sanders says he’s encouraged by the president’s support for the MILC program. But Sanders thinks there’s a better solution. He’s joined Leahy and Senator Jim Jeffords in pushing the National Dairy Equity Act. While similar to the MILC program – in that dairy farmers are paid when the price the milk drops – funding for the equity act comes from processors, not taxpayers. Sanders says this makes the program more attractive to fiscal conservatives:

(Sanders) “When you have huge deficit, a lot of people say, Okay we want to protect family-based agriculture, we want to see the family farm survive. But we’d rather do it without spending government money, given the fact that the deficit is so how. We’d rather have the processors make up the difference.”

(Shaw) John McClaughry is president of the Ethan Allen Institute in Concord. He says the equity act isn’t the answer.

(McClaughry) “It’s a price-fixing scheme, which sends the bill ultimately to the consumer. Because the processors don’t tell their shareholders, I’m sorry we’re going to tax you to make up the difference. They just raise the price in the supply chain down to the ultimate consumer at the grocery, and Mr. and Mrs. Housewife ending up paying the extra cost of the program.”

(Shaw) Leahy says extending the MILC program will be much easier than passing national dairy equity legislation.

(Leahy) “The problem we’ve had is been so strongly opposed by the White House. And I give the president the credit – at least he’s been straight forward and said he opposes it. But it makes the climb a lot harder, especially with a Republican House and a Republican Senate. But that doesn’t mean you should give up.”

(Shaw) Back on his farm, Powell says some sort of subsidy is necessary.

(Powell) “If you’re making widgets and you need a million widgets a day and all of the sudden your demand drops to half a million widgets, you shut you machinery down half the time and still make half your widgets. But you can’t shut your cows off and then turn them back on next week because you need more widgets.”

(Shaw) John McClaughry:

(McCLaughry) “The farmers are right that you can’t put Bossy in deep-freeze until the price comes back up. But so what? Every other business has the same kind of a problem. You never know how changing consumer tastes are going to impact your product. So every business, farming included, is a bit of a gamble.”

(Shaw) Back in the 1950s there were 11,000 dairy farms in the state of Vermont. Today there are just over 1,000. But they produce more milk Says McClaughry:

(McClaughry) “We have to decide really as a society whether we’re going to invest public resources into keeping a certain fraction of the population in agriculture.”

(Shaw) That’s a no-brainer for the Vermont delegation. They say they’ll do what it takes to preserve milk subsidies and the state’s dairy farms. But it’s far from clear they’ll get their way. The president is set on spending cuts and lawmakers from every state will be fighting to protect their piece of the pie. And with Republicans controlling all Senate and House committees, Vermont’s small delegation has no leadership voice in the budget process.

For Vermont Public Radio, I’m Benjamin Shaw on Capitol Hill.

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