The Wisconsin State Journal's editorial board is advocating Congress put an end to the Milk Income Loss Contract.
The newspaper claims federal subsidies for dairy farmers have reached nearly 2-billion taxpayers dollars in some years and the MILC program, as it's called, only promotes over-production, lowers prices even more then making farmers rely on government support.
UW Dairy Marketing Economist Robert Cropp says farmers only get 34 % of a price below a set target. He doesn't see that as much of an incentive to over produce.
But Cropp says farmers, especially the smaller ones, need a safety net. Not a price enhancement program that makes farmers rely on the government all the time but one that helps out when prices drop drastically.
If the price of milk falls below a set target price per pound then the Milk Income Loss Contract will pay farmers to make up the difference. According to the State Journal, this only encourages farmers to produce more milk to make more government money. The more milk produced, the lower the price goes (supply and demand) which the newspaper says perpetuates the cycle. The newspaper says reforms would move the industry to a freer marketplace in which " farmers produce to meet consumer demand rather than collect a government check."
The Milk Income Loss Contract expires in August and Cropp says he's not positive it will actually be renewed.