AUGUSTA – During an hour-long conversation Friday about the national dairy crisis and its effect on Maine, Gov. John E. Baldacci said no Maine farmer should interpret his promised veto of a proposed milk handling fee as a negative move against Maine’s dairy industry.

Baldacci said he recognizes the dire straits Maine farmers face but cannot sign a measure that will generate far more money than necessary.

The proposal would place a temporary fee of 32 cents per gallon on each gallon of milk sold in Maine, a fee that would raise more than $13 million in the first 12 months.

For a family that consumes 3 gallons of milk a week, it amounts to the same cost as a bottle of soda.

Because of federal pricing policies, Maine farmers are being paid $12 per hundredweight for milk that costs them between $17 and $22 to produce. Prices have continued to plunge during the past 16 months, an unprecedented situation for the dairy industry.

Most Maine farmers back the proposed fee, according to industry officials.

Had the expired Northeast Dairy Compact remained in effect and provided payments to offset dips in federal milk prices, Baldacci said Maine dairy farmers would have received an additional $8 million for their milk last year. The federal government offset some of that loss with a $5.8 million program.

That leaves only a $4 million gap, said Baldacci – far less than the amount the milk handling fee would generate.

“We have been meeting and talking and doing the best we can,” Baldacci said, “but to put a tax on Maine families of $13 to $14 million … What are we basing that on?”

Proponents of the fee say the revenue, which goes directly into the state’s general fund, would offset a $5.5 million appropriation proposed to offset half of the difference between farmers’ cost of production and current milk prices. Based on current production of 42 million gallons of milk annually, the fee would raise $13.24 million for the state.

The governor said he would unveil a multitiered program next Friday that would provide short- and long-term solutions to the crisis. There is speculation that the plan involves borrowing from the Maine Agricultural Marketing Loan Fund and floating a bond in the June or November referendum.

“There is a real opportunity in this crisis for long-term growth,” said Baldacci. “We’re trying to give [the farmers] the tools to help them succeed.”

The milk handling fee proposal has been tabled by the Legislature’s Taxation Committee pending the release of Baldacci’s dairy plan.

The governor said his temporary aid package released last month included a $725,000 provision to be mailed next month to farmers based on their individual production. The average payment will be $2,000 per farm.

Baldacci said these additional resources were made available to farmers even when other departments were being cut back severely.

“I’m not new to agriculture,” said Baldacci, who as a congressman worked on two dairy compacts. “But I believe it is like the old lesson of giving a man a fish or teaching him to fish. We need to be showcasing diversified farms, farms that are using grants and other nontraditional funding to open up new markets. We need to expand our organic production, an exploding market.”

The governor said his plan for economic development through Pine Tree Zones could be used to lure processing plants to the state. With more than 25 percent of Maine milk leaving the state fluid and returning processed, Maine should be capturing that added value, he said.

Meanwhile, aside from the yet-to-be-revealed plan, Baldacci said he has been working with Maine’s congressional delegation to continue to push for reauthorization of the Northeast Dairy Compact.