A battle is brewing in Congress between milk processors and producers over renewal of the Milk Income Loss Contract (MILC), which provides a government subsidy to farmers. Legislation was introduced in early February that would double the size of the MILC subsidy. The legislation, introduced by Sen. Norm Coleman (R-MN), would extend the program through September 2007 and increase the cap in the subsidy formula to 4.8 million gal per year. Dairy processors are lining up against the measure, noting that it was introduced a day after President Bush called for curbing the federal deficit during his state of the union speech.

A battle is brewing in Congress between milk processors and producers over renewal of the Milk Income Loss Contract (MILC), which provides a government subsidy to farmers. Legislation was introduced in early February that would double the size of the MILC subsidy. The legislation, introduced by Sen. Norm Coleman (R-MN), would extend the program through September 2007 and increase the cap in the subsidy formula to 4.8 million gal per year. Dairy processors are lining up against the measure, noting that it was introduced a day after President Bush called for curbing the federal deficit during his state of the union speech.

"Making MILC bigger won't make it better, but it will make it even costlier," said Chip Kunde, International Dairy Foods Association 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."

Both producer and processor groups in Washington are pressuring USDA for a quick decision on the "producer-handler" issue impacting dairy operations in western states.

The National Milk Producers Federation (NMPF) and International Dairy Foods Association (IDFA) called on Agriculture Secretary Mike Johanns to issue a decision on a proposal to end the regulatory exemption for producer-handlers from pooling and pricing provisions of the Arizona-Las Vegas and Pacific Northwest marketing areas. The issue was aired during hearings in 2003 and 2004. The two dairy groups say testimony and exhibits presented at that hearing demonstrated the need for USDA to ensure equitable treatment of all dairy producers and processors in a Federal Milk Marketing Area.

USDA put off lifting restriction on the importation of cows from Canada until concerns about BSE can be completely put to rest. Under new rules adopted by the agency in January, imports of cows over 30 months in age could have resumed, with Canada classified as a country with "minimal risk" of BSE. But Agriculture Secretary Mike Johanns says a little prudence can't hurt. "Our ongoing investigations into the recent finds of BSE in Canada in animals over 30 months are not complete. Therefore, I feel it is prudent to delay the effective date for allowing imports of meat from animals 30 months and over," Johanns said.