Tax Increase for Dairy Farmers in Budget Proposal

Dairy farmers would be taxed $0.03 for every hundredweight of milk produced.

Published on: Feb 16, 2006

Under the proposed Bush Administration's budget for FY2007, the National Farmer's Union says "America's dairy farmers will be hit by a trifecta of taxes and assaults on their safety net."

NFU Vice President of Government Relations Tom Buis says, "America's dairy farmers should not be expected to pay new taxes and diminish their safety net so multi-millionaires get another tax cut."

Under the Bush Administration's budget proposal, dairy farmers would be taxed $0.03 for every hundredweight of milk produced. For an average size farm, this amounts to more than $700 per year in new taxes. In addition to the new tax, dairy farmers are taking a hit on their safety net. Congress just approved a scaled-down extension of the Milk Income Loss Contract program, which provides producers an economic safety net when prices fall below a specific level. The Bush budget calls for further reductions in the MILC program with a 5% cut of all payments.

"In the final blow to our nation's hard working dairy farmers, the president's budget calls for the U.S. Department of Agriculture to adjust the price support program to keep costs at a minimum," Buis says. "This means producers will lose additional leverage of their safety net."

Dairy producers are facing increased costs in production, a dilapidated safety net, predicted market lows for milk in 2006, increased imports and ongoing efforts to change the definition of milk for the benefit of processors. In this harsh operating environment it makes little sense to further jeopardize their futures.

"With 25% of the 2007 budget cuts coming out of agriculture spending, farmers and ranchers are saying enough is enough," Buis says. "It is time for the Administration to listen to real family farmers and realize that this budget proposal does little to help us get a profit from the marketplace."