Panel seeking $1.2M in aid for dairy farmers

By Sharon Kiley Mack, BDN Staff
Posted Feb. 02, 2011, at 8:18 p.m.

AUGUSTA, Maine — Members of the Legislature’s Agriculture, Conservation and Forestry Committee voted late Tuesday to seek $1.2 million in the state’s supplemental budget to assist Maine’s struggling dairy farmers.

“For the next four months, on a day-to-day cash flow basis, Maine’s dairy farmers are in the cross hairs,” Julie Marie Bickford of the Maine Dairy Industry Association said Wednesday. “Big or small, everybody is at risk.”

Bickford said that the federally set blend price for milk in December — the price that farmers’ February payments will be based on — was $16.91 per hundredweight. In Maine, it costs the majority of farmers $20.70 per hundredweight to produce milk.

“Grain costs have doubled. Fuel is up dramatically. Dealers have extended credit as far as it can go, and farmers are now preparing to meet with their lenders regarding funding for the next growing season,” Bickford said. “It is near crisis.”

At the center of the crisis is Maine’s Dairy Stabilization Tier Program, a ground-breaking system that has been touted as a model across the country.

The subsidy provides a safety net when the federally set price of milk dips below $17 per hundredweight. Even with the subsidy, Maine dairy farmers are still not making enough to cover their production expenses.

Because it costs more to make milk in Maine than anywhere else in the country, the program has helped stabilize the industry and slowed the loss of farms. Still, Maine lost 24 farms in just the past year.

When milk prices are high, farmers get nothing from the program. But when prices drop too low, the state subsidy kicks in to help make up for what the federal subsidy does not. Farmers must apply to receive the state subsidy.

The tier program is balanced by a milk handling fee paid by the consumer that brings in about $6 million annually. But legally, the handling fee cannot be formally linked to the dedicated program.

“It may not be official, but there is a kind of public trust that the handling fee money is used to support the tiered program,” Bickford said. Unfortunately, the $6 million that the handling fee brought in last year went into the state’s general fund and was spent in other areas, Bickford said. And no funding for the tier program was placed in the supplemental budget to offset the funds.

The agriculture committee vote on Tuesday was 8 in favor and 2 opposed to make the funding recommendation to the Appropriations’ Committee. “They [agriculture committee members who voted against seeking the funding] made it clear that there was no lack of support for the program,” Bickford said. “They understand the program and agreed that we still need to get money to these farmers. It was purely a dollars decision.”

Committee member Dean Cray, R-Palmyra, who voted against seeking the additional funding, said Wednesday, “I feel that we made a deal two years ago with the farmers. We capped the tier program at $17.3 million and took the money up front.

“The dairy farmers took the chance that milk prices would go up and they didn’t,” he said. “I support the dairy industry, and this was a hard vote for me to say no. But why take this before the Appropriations’ Committee and make them look like the bad guys? I think it will be killed outright.”

Committee member Rep. Jeff McCabe, D-Skowhegan, however, said Wednesday that he felt “the governor’s office has completely left out the dairy industry, even in discussions. This is very troubling to me.”

He said it is important to stand up for the program now.

“The dairy industry upholds Maine’s entire agricultural infrastructure,” he said. “This money that goes to the farmers, they aren’t keeping it. It goes right back into the economy, to employees, dealers, taxes.”

All state offices closed at noon Wednesday because of the winter storm, and Gov. Paul LePage could not be reached for comment on the proposed appropriation. But Bickford said no one in state government is disputing the value or the impact of the tier program.

“We feel the support from the Legislature and the governor,” she said, “but that is not translating into dollars.”

Bickford said Maine’s dairy industry is also very concerned about securing funding in LePage’s biannual budget, which is now under construction. “We need to make sure there is continuity in this program,” she said.

Bickford said there has been no discussion of eliminating the handling fee if the Appropriations Committee does not fund the tier program.

“That would take on a different tone,” she said. “That would cut the legs out from under the program in the future.”

http://bangordailynews.com/2011/02/02/business/panel-seeking-1-2m-in-aid-for-dairy-farmers/ printed on August 1, 2014