The Bush Administration unveiled its proposed budget for Fiscal Year 2007 including a reduction in the value of the price support program, cutting MILC payments by 5%, and taxing farmers 3 cents per cwt. on all of their production.
The changes need approval from Congress, which is far from a certainty. They would take effect for the fiscal year that begins Oct. 1.
The dairy cuts are part of an agriculture budget aimed at reducing spending on commodity programs by $1 billion.
|
MILC Payment Rate |
|
Year |
Class I Base |
Payment Rate |
|
October '05 |
14.27 |
0.000 |
|
November |
14.56 |
0.000 |
|
December |
13.57 |
0.0408 |
|
January '06 |
13.38 |
0.1054 |
|
February |
13.38 |
0.1054 |
|
March |
12.40 |
0.4386 |
|
April |
11.82 |
0.6363 |
|
May |
11.71 |
0.6720 |
|
June |
11.83 |
0.6316 |
|
July |
11.76 |
0.6577 |
|
August |
11.98 |
0.5806 |
|
September |
12.31 |
0.4689 |
In related news, the MILC program was extended through August 2007 upon approval by the President recently. If the Class I base price drops below $13.69, farmers are eligible for a USDA payment equal to 34%of the shortfall. This percentage is down from 45% in previous fiscal years. The extended payments will be retroactive to October 1, 2005, and are capped at 2.4 million lbs. of milk production per fiscal year.
Farmers will likely need to contact the Farm Service Agency to renew their participation in the program. FSA will issue its directions for this new signup, and is expected to be relatively flexible as to the farmers' choice of a start date for payment.
*Months in italics are projections.
Based on futures as of February 10, 2006.