Legislative panel suggests slashing milk subsidies

By Sharon Kiley Mack, BDN Staff
Posted Jan. 20, 2009, at 8:17 p.m.

AUGUSTA, Maine — State legislators on the Agriculture, Forestry and Conservation Committee on Tuesday took the unprecedented step of recommending that price supports to Maine’s dairy farmers be slashed by $4.8 million.

The bad news for dairy farmers comes on the heels of predictions made last week that milk prices are crashing, and, by March, are expected to be almost half what farmers received a year ago.

The farmers’ prices per hundredweight of milk for last June were $19.56. A price of $11.54 is predicted for March 2009. A soon-to-be-released study by the University of Maine states that the cost of production for milk in Maine, not including profit, is $24.50 per hundredweight.

“This is the perfect storm for dairy,” Julie Marie Bickford of the Maine Dairy Industry Association said before the hearing. “All our farmers are squeezed to the breaking point.”

More than 90 farmers and dairy industry leaders attended the Tuesday work session by the Agriculture Committee.

Walter Fletcher, who has a dairy farm in Pittsfield, recently had begun planning for his youngest son to return to Maine from his out-of-state career and expand the farm. Fletcher had purchased a tract of land neighboring his farm and was preparing to add 100 cows to his 200-cow milking herd.

The state subsidy “provided that safety net, a way for the younger generation to start or continue in dairy farming. I’m not sure now,” he said Tuesday.

The $4.8 million the legislative panel recommended cutting represents about 37 percent of what the Maine Milk Commission and Maine Revenue Services forecast would be required to fund the milk subsidy program in the fiscal year that runs from July 1, 2009, to June 31, 2010.

But the state is facing an overall deficit of more than $800 million in the next two-year budget cycle that starts July 1. To help close the budget gap, the Department of Agriculture was asked to cut $4.8 million.

The agriculture committee discussed across-the-board percentage cuts in the subsidy program ranging from 17 percent to 40 percent to each farmer. With subsidies tied to how much milk a dairy farm produces, the panel members also discussed placing a cap on how much milk would be subsidized.

In the end, the lawmakers on the panel voted 6-5 in favor of an across-the-board cut slashing $4.8 million from the subsidy program. A minority report called for all that the majority recommended with the addition of a cap of 7 million pounds of milk being eligible for subsidies. Any milk that a farmer produced beyond 7 million pounds would not be subsidized.

The two reports will go to the Appropriations Committee later today.

http://bangordailynews.com/2009/01/20/politics/legislative-panel-suggests-slashing-milk-subsidies/ printed on August 21, 2014