This is good news, for now. What do you think of the President’s plan?
Dairy farmers faced with falling milk prices would continue to get federal aid as part of a 2008 budget proposal announced Monday by President Bush. However, the president’s longer-term plan calls for reductions in the federal subsidy, which kicks in when milk prices fall below $16.94 per hundredweight for fluid milk.
The White House is asking Congress to continue the Milk Income Loss Contract subsides, called MILC, for fiscal year 2008 at the current rate. When milk prices drop, farmers are paid 34 percent of the difference between the base price of $16.94 per hundredweight and the market price in Boston.
However, the administration announced last week that its plan for a massive new five-year farm bill would begin to reduce the dairy subsidy beginning in fiscal year 2009. Instead of receiving 34 percent of the difference between the base price and the market price, farmers would get 31 percent in 2009, 28 percent in 2010, 25 percent in 2011 and 22 percent in 2012. The president’s plan also would reduce the amount of milk production eligible for the subsidy.
The program’s cost to taxpayers varies from year to year depending on fluctuations in milk prices. However, the overall cost of the subsidy from its beginning in 2002 through the end of this year is estimated at about $3 billion.