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In December, the House and Senate voted to extend the Milk Income Loss Contract (MILC) program for two years.

The U.S. Department of Agriculture's Farm Service Agency administers MILC which financially compensates dairy producers when domestic milk prices fall below a specified level. The program was authorized by the 2002 Farm Bill and had no set funding level.

The new agreement would extend the MILC program through September 2007 and would reduce the income loss payment from 45 percent to 34 percent of the difference between the trigger price and whatever the current market price is when the MILC is activated.

The MILC program extension was included in the budget reconciliation conference report, which Congress passed in December. The bill included $2.7 billion of mandatory farm program spending cuts over five years.

Other provisions in the bill included:

Commodity Programs:
• No extension of commodity programs
• No across-the-board cuts for commodity programs
• Advance direct payments reduced to 40 percent in crop year 2006; further reduced to 22 percent in crop year 2007

Conservation Programs:
• EQIP extended to 2010, funds reduced $1.27 billion in fiscal year 2007 – 2009; $1.3 billion in fiscal year 2010
• CSP extended to 2011, funds capped $1.954 billion fiscal year 2006 – 2010; $5.65 billion fiscal year 2006 – 2015
• Watershed Rehabilitation program – Cancellation of funds available prior to Oct 1, 2006