Senator Leahy and his colleagues on the House and Senate Agriculture Committees, assisted by Senator Jeffords, Congressman Sanders and others, reached an agreement on the key issues that differed in the separate versions of the farm bill passed earlier by the House and the Senate. The new farm bill, when enacted, will assist America’s family farmers, expand economic opportunity in rural communities, strengthen programs to protect the environment and improve the nutritional safety net for low-income Americans. The new farm bill, in its final form, still must be approved by the Senate and the House of Representatives and signed into law by the President.

If enacted, the new farm bill will establish a new national dairy program, sponsored by the Vermont Congressional delegation, that will provide cash assistance to dairy farmers comparable to what dairy farmers from Vermont and other New England States received under the Northeast Dairy Compact. Senator Leahy, Senator Jeffords and Congressman Sanders originally pressed for an extension and expansion of the Northeast Interstate Dairy Compact. After Members of Congress from other regions blocked these efforts, the national dairy program, approved by House and Senate negotiators, was offered as a compromise.

If the farm bill is enacted, dairy farmers across the country will receive monthly payments – when fluid milk prices fall – nearly identical to what New England producers received under the Northeast Dairy Compact. Like the Compact, whenever the federal minimum price for fluid milk in Boston falls below $16.94 per hundred weight, participating dairy farmers will receive a payment. The national dairy program will pay producers 45 percent of the difference between $16.94 and the Class I fluid milk price in Boston. Like the Compact, payments will be made on a monthly basis and will fluctuate with milk prices; no payments will be made when the fluid milk price in Boston is $16.94, or higher. Under this program, the U.S. Department of Agriculture's Commodity Credit Corporation, not milk processors, will make the payments.

Producers should begin receiving payments under this new national dairy program early this fall. USDA is required to begin signing up farmers to participate in the program not later than 60 days after the new farm bill is signed into law. Like the Compact, producers will receive payments on a monthly basis: USDA is required to pay producers not later than 60 days after the end of each month for which a payment is made.

A significant feature of the new national dairy program is that it will be retroactive, covering market losses due to low prices since December 1, 2001. On that date, there was a devastating drop in the price for Class I fluid milk. The Vermont Congressional Delegation estimates that the retroactive payments to Vermont dairy farmers covering losses from December 2001 through April 2002 will total more than $9 million. Producers should receive these retroactive payments at the same time they receive their first payments early this fall.

Whereas the Compact made payments to producers based on the amount of milk marketed in the six-state Compact region, the national dairy program will make payments based on milk marketed in any of the 50 states. However, each producer will be able to receive payments on no more than 2.4 million pounds of production per year. Only milk marketed during a month in which a payment is made will count toward that total. The Compact had no similar production limit. The 2.4 million-pound cap is equal roughly to the annual production of 140 cows.

The national dairy program is authorized through September 30, 2005. The bill also re-authorizes the milk price support program under which the government purchases powdered milk, cheese and butter offered to it at the equivalent of $9.90 per hundredweight. It also re-authorizes the Dairy Export Incentives Program (DEIP); requires importers to pay the dairy research and promotion program assessment; and authorizes a new Johnes disease research initiative.

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