November 18, 2005

House leader backs reviving $1 bln dairy subsidy

By Charles Abbott

WASHINGTON (Reuters) - House Speaker Dennis Hastert on
Friday, put his weight behind reviving a $1 billion dairy
subsidy for farmers, supporting a two-year extension like that
already approved by the U.S. Senate in a broad federal
budget-cutting bill.

The Milk Income Loss Contract (MILC) program, which expired
on September 30, sent dairy farmers a check when milk prices
fell below a trigger level. MILC was popular in U.S. Northeast
and Midwest states but Westerners said it shortchanged the
larger herds in their region.

In a letter, Hastert said he would instruct House
negotiators on a budget-cut bill "to secure an extension of a
MILC program through September 30, 2007." The Senate wrote a
similar extension into its budget bill.

Early Friday, the House approved a broad bill to cut
federal spending by $50 billion over five years while the
Senate's version would reduce spending by $35 billion.
Negotiators from both chambers must now agree on a compromise

Extending MILC for two years would cost $1 billion.

While Hastert's backing boosted chances for renewal of
MILC, agreement was not guaranteed, said the International
Dairy Foods Association, which opposes MILC.

"We think the fact it was not included in the (House)
package speaks volumes about the costs and controversy of the
program," said David Vance, an IDFA spokesman. The House passed
its budget bill by only two votes, Vance said, so "there will
be more deals struck" in the future.

Under MILC, payments are made on up to 2.4 million pounds
of milk per farm, equal to the annual output of 150 cows. USDA
spent $2 billion on MILC from its creation until it expired
nearly two months ago.

"I support efforts to reduce overall government spending
while maintaining an adequate safety net for our food
producers," Hastert said in the letter to Wisconsin Republican
Mark Green, who voted for the bill.

Green is running for the Republican nomination for governor
of Wisconsin, the No. 2 dairy state behind California.

For the past week, MILC figured in discussions among House
Republicans over how to craft a budget bill that would muster
enough votes to pass the House.

MILC is a high-profile issue in Wisconsin. During his 2004
re-election campaign President George W. Bush told a rally in
Wausau that he would work with Congress to reauthorize MILC. He
proposed a two-year extension in February.

If Congress extends MILC into 2007, it could become a topic
for the overhaul of the U.S. farm subsidies and supports law
expected that year.