Lawmakers question costs of milk price subsidy program

PORTLAND – A milk subsidy program that paid Maine dairy farmers $11.2 million between 2002 and 2005 could be put out to pasture in Congress as lawmakers question its cost.

“I’m concerned that the ongoing cost of this program is depleting funding that could be used elsewhere,” U.S. Sen. Mike Crapo, R-Idaho, said at a hearing before the Senate Agriculture Committee in which the milk subsidy was at issue.

The Milk Income Loss Contract subsidizes milk prices to protect smaller dairy farmers such as those in Maine. The debate over the program’s future pits large Western farms against smaller Eastern ones, which are less able to cope with price fluctuations.

The subsidy has run higher than projected for most of the decade because the prices farmers could get for milk were low. Prices dropped again this year and are projected to stay low next year.

Opponents of the subsidies say it costs billions of dollars to buy products when prices fall below certain levels. The program paid $2 billion to farmers between 2002 and 2005.

Maine lawmakers, industry officials and farmers counter that dairy farms, which employ 1,300 people directly, are worth supporting to maintain local milk production, jobs and open space.

All four members of Maine’s congressional delegation support the program. But none serves on an agriculture committee, where the new farm bill will be negotiated. The federal subsidy program has faced political struggles for years.

The program expired Sept. 30, but was revived in February and will remain in effect until late 2007, when the next major farm bill is expected to begin.

The program subsidizes the first 2.4 million pounds of milk a farm produces, but the state of Maine extends the subsidy up to 5 million pounds for each farm, which covers herds twice as large as the federal program.