The administration’s FY’07 budget proposal for USDA revealed at a press conference today by Ag Secretary Mike Johanns includes reductions in two dairy price support programs and a new tax on dairy production.
The $93 billion budget is $3 billion less than ’06, as Johanns cited the need for agriculture to do it’s part to reduce the deficit.

Dairy farmers will take a hit in the form of:
1. A five percent cut in all commodity program payments, including the Milk Income Loss Compensation program;
2. A change in the way USDA sets dairy price supports to minimize payments to farmers;
3. A new three cents per hundredweight dairy assessment to be paid by producers.

During the press conference, Johanns was asked by one reporter basically how he can justify making producers pay directly for deficit reduction. Johanns answer was, “We’ve got to deal with the deficit. And again, it is never an easy thing.” (listen to the complete Q&A regarding the dairy assessment)

Needless to say, dairy industry representatives and supporters are concerned about the budget proposal and plan to study it closely.

Here’s a link to all the info about USDA’s budget proposal.