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Expansion of farm subsidy program nears

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By CYRUS LEVESQUE

ADDISON COUNTY — Conditions this spring have been a mixed blessing for Addison County farmers — milk prices are relatively high but so are the costs of feed and fuel.

But a deal to extend and expand a federal dairy price support program struck on Friday could be a big help.

After a marathon negotiating session, conferees from the U.S. Senate and House agriculture committees agreed on an extension of the Milk Income Loss Contract (MILC) Program in the U.S. Farm Bill at around 1 a.m. last Friday, according Vermont Sen. Patrick Leahy. The Democrat is the senior member of the Senate agriculture committee.

The expansions to the program include incorporating the rising cost of feed, making base payments larger and making farms with larger herds available.

The MILC program, originally created in 2002, provides extra help for dairy farmers when the price of milk falls below a certain threshold. Under the current program, if the price of raw milk drops below $16.94 per hundredweight — about 12 gallons — extra payments for farmers are triggered. The payment is equal to the amount of milk a farmer sold in that month multiplied by 34 percent of the difference between $16.94 and the price that milk actually sold for.

Payments are capped after a farm has sold 2.4 million pounds of milk in a year.

The revised version in the program includes three significant changes.

First, the rising cost of feed will, for the first time, become a factor triggering payments under the program. When three major feed commodities — corn, hay alfalfa and soybeans — hit a certain price, payments will kick in. Rising feed costs, fueled especially by skyrocketing energy costs, are a growing strain on farmers.

If the feed costs in the new formula were part of the existing formula, the threshold for payments to farmers would be around $19 per hundredweight instead of $16.94, according to Brian Baenig, agricultural policy aide for Leahy.

Second, the multiplier used in calculating the payments also increased from 34 percent to 45 percent.

Third, the maximum amount of milk produced that factored into payments will increase from 2.4 million gallons to 2.985 million gallons, which Baenig described as the difference between a herd of about 120 cows and one of about 165 cows.

“That is a major improvement in the program for Vermont farmers,” Baenig said. 

Dairy farmers in Addison County, who suffered through a slump in milk prices in 2006, enjoyed a relatively high price for their milk in the last year, peaking at $24 per hundredweight. The price seemed to bottom out in 2006 per cwt at about $12 and is now selling for $18.

“Vermont’s priorities rank high in this bill,” Leahy said in a release, where he also credited the members of the Vermont Congressional delegation. “Keeping the MILC safety net in place was Job One for us, and strengthening it was a close second.”

According to Jim Bushey of Bourdeau Bros., a Middlebury agricultural commodities dealer, fuel prices and demand for using crops for biofuels like ethanol are part of what drove the price of feed up. He said the main cause of the problem is probably the weak dollar.

As the value of the dollar falls compared to other currencies, it helps exports because the same amount of yen or euros will buy more American products. That has been good news for growers of grain because it makes exports more profitable. But for Vermont farmers, as consumers of commodities like corn and other grains, increased demand overseas means increased prices at home, Bushey said.

In some ways, the previous year was a good one for the agriculture industry in Vermont. The Agri-Mark dairy cooperative reported record profits of $17.6 million in 2007, and the current year is shaping up to be productive as well, with a spring that has been wet but not too wet.

“From what I know, we had some great weather in April,” said Gary Braman of the Addison County branch of the Farm Services Agency. “We’ve had a few rainy days, and that’s been good.”

But Braman explained that profits like those reported by Agri-Mark might or might not be helping individual farmers. “Businesses like that are going well, but that doesn’t always make it to the farmers,” he said.

Beyond MILC, other issues of the Farm Bill in the conference still remain to be settled. Final details of the bill will be finalized over the next few days, said Leahy spokesman David Carle, and it then will go to the Senate and House for approval and on to the President for signing or veto.

Carle said both houses of Congress will probably OK the Farm Bill that comes out of the conference committee, but he couldn’t be certain. “It’s impossible to say at this point,” he said on Friday.

Carle said the bill has broad and bipartisan support. “It’s important to not only have as large a coalition as possible, but a bipartisan and (multi)-regional coalition,” he said.

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