WASHINGTON, Feb. 4 /PRNewswire/ -- The International Dairy Foods
Association (IDFA) is urging members of Congress to reject legislation (S.
273) introduced on Feb. 3 that would double the size of the Milk Income Loss
Contract (MILC) subsidy, a costly and divisive program initially intended to
help dairy producers that has already cost American taxpayers over $2 billion.
This proposal comes just four months after the U.S. Department of
Agriculture (USDA) concluded in a groundbreaking report that MILC actually
depresses the farm milk price paid to U.S. producers, an effect completely
contrary to its intent. Because MILC was layered on top of several other
dairy support programs without regard to its interaction with them, it has
created conditions leading to lower farm prices. In fact, the USDA study
found that MILC is directly at odds with the Dairy Price Support Program, an
existing government program that purchases surplus cheese, butter and skim
milk powder.
"Making MILC bigger won't make it better, but it will make it even
costlier," said Chip Kunde, IDFA senior vice president. "At a time when the
nation needs to hold the budgetary line, this legislation would pour billions
of dollars in new spending into a program that just doesn't work as national
dairy policy."
The MILC program has proven to be regionally divisive in the dairy
producer community -- pitting East against West. As a more productive step
forward, IDFA is calling for a deliberate examination of all dairy programs,
including a review of the October 2004 USDA report and the concerns it raises
about the incompatibility of MILC with existing government dairy support
programs. Congress needs to seek the advice of industry experts on
alternatives to the current system that are less market disruptive, compliant
with world trade obligations, and help all farmers nationwide better manage
market fluctuations.
The Congressional Budget Office (CBO) estimated in 2002 that the original
MILC program would cost taxpayers less than $1 billion; the price tag to date
has been more than $2 billion -- more than double CBO's original estimate.
Last year, an effort was made to extend the program, a move that the CBO
estimated would cost taxpayers another $1.7 billion. However, the new
legislation introduced yesterday would actually double the original cap in the
MILC formula to allow for higher payments, with no plan to offset the cost.
Moreover, MILC has no consensus of support among the national dairy
producer community. Less than one-half of the nation's milk production
qualifies for the subsidy payments under the original MILC program, placing
most farmers -- particularly those in western states -- at a competitive
disadvantage.
"MILC is a regionally divisive program that doesn't fit into our national
dairy policy, much less into U.S. efforts to liberalize trade worldwide,"
stated Kunde, noting that MILC payments are the most trade-distorting type of
domestic support according to global trade rules.
During final budget negotiations last fall, the bill's proponents
attempted to attach a MILC extension to the appropriations bill for the
Departments of Veterans Affairs and Housing and Urban Development; the effort
failed.
"Congress should examine this failed program in the light of day," said
Kunde. "Pushing forward an expensive and market-distorting government subsidy
without a thorough review by Congress would be fiscally irresponsible."
IDFA is the Washington, DC-based organization representing the nation's
dairy processing and manufacturing industries and their suppliers. IDFA is
composed of three constituent organizations: Milk Industry Foundation (MIF),
National Cheese Institute (NCI) and International Ice Cream Association
(IICA). Its 500-plus members range from large multinational corporations to
single-plant operations, and represent more than 85% of the total volume of
milk, cultured products, cheese, and ice cream and frozen desserts produced
and marketed in the United States -- an estimated $70-billion a year industry.
IDFA can be found online at http://www.idfa.org.