Senate Creates $2 Billion Federal Subsidy for Dairy Farmers; New Amendment Promoting Farm Savings Accounts May Be Offered as Replacement Dairy Plan

Despite opposition from major farm, taxpayer and industry groups, the Senate last week voted 51 to 47 to table an amendment that was offered by Senators Mike Crapo (R-ID) and Jeff Bingaman (D-NM) to strike a new $2 billion federal subsidy for dairy farmers in the 2002 farm bill. This new direct government subsidy plan, backed by Senate Majority Leader Tom Daschle (D-SD), replaces the previous dairy provision that would have created a national milk pricing floor. The direct subsidy plan would make direct payments to dairy farmers on the first 8 million pounds of annual milk production. The Senate version of the farm bill is still open for debate and amendments despite Democratic attempts last week to push through the legislation. Senator Crapo may offer another amendment this week that would replace the dairy subsidy plan with a $1.9 billion dairy farm savings account program. Under the terms of the new Crapo amendment, the federal government would place $500 million into the saving accounts for initial, un matched payments. These initial payments would be based on the average amount of milk that farmers produced in 1998, 1999 and 2000. The remaining $1.4 billion would be used to match dairy farmer deposits in the coming years.

IDFA supports an alternative farm bill, which will be offered by Senators Pat Roberts (R-KS) and Thad Cochran (R-MS), that is also supported by the Bush Administration. The Roberts-Cochran bill is expected to include the new Crapo dairy farm savings accounts program. Since there is still a great deal of negotiating to be done, the end result on dairy in the Senate farm bill is unclear at this time.

The Senate started consideration of its farm bill on December 5, but debate on the legislation continues into this week, which could be the final week of work for Congress before its adjournment for the year. Even if the Senate passes its farm bill this term, the language will have to be reconciled with the House farm bill, making it unlikely that final legislation would reach the White House before the end of the year.

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Posted Monday, December 17, 2001 ###