MILC to be extended through FY 2007

With House passage of the Conference Committee report of the Budget Reconciliation Bill, the Milk Income Loss Contract program regains life, albeit in a slightly cheaper way.

The Senate must also pass the report, and President Bush must sign the legislation, before it becomes law. But both are

The program becomes active again at the President's signature, and is not retroactive to when it expired on Sept. 30. That has little practical effect anyway, although the December Class I price has been announced at $16.82. Had MILC been in effect, that would have triggered a payment of 4 cents/cwt. The program will be in effect until Sept. 30, 2007.

The new program is less generous than the original. Payments are triggered when the Class I price in Boston falls below $16.94. The new program only pays 34% of the difference, not 45% as the old program. The 2.4 million lb. annual production cap still applies. Nevertheless, the budget impact of the new bill is still estimated at $1 billion.

Extension of the MILC program produced strange political bedfellows, with Republicans in small-farm states such as Minnesota, Pennsylvania and Wisconsin lobbying hard for the extension while their counterparts in the West argued against it. In the end, local politics won out.