(The Center Square) — A Maine task force is urging the state to raise ‘sin’ taxes to pump more money into the milk industry, with many of the state’s family-owned dairy farms at risk of going out of business.
A draft report by the Maine Dairy Task Force, which was tasked with coming up with recommendations to support the struggling industry, is calling on lawmakers to consider increasing taxes on cigarettes, gambling and cannabis sales to provide more money for the state’s Dairy Tier Program, which provides state subsidies to dairy farmers to help cover production costs.
The report’s authors point out that while there are “bright spots” in Maine’s dairy industry, production costs remain high, federally determined milk prices are dropping and some markets are shrinking as Americans drink less fluid milk.
“Maine dairy farms continue to go out of business, and we risk reaching a tipping point where the amount of milk produced falls below what can sustain an industry,” the report’s authors wrote. “This is concerning not only for Maine’s dairy industry but for Maine agriculture as a whole.”
Task force members recommend that the program be funded with a minimum of $7.5 million and urge lawmakers to consider increasing the state’s taxes on pot, tobacco and gambling to provide additional revenue for the account. Specifically, the report’s authors call for increasing the tax on adult-use cannabis sales from the current 10% to 13.5% or adding $0.05/pack to the tobacco tax and dedicating the additional revenue to the stabilization program.
“Marijuana is also a growing market in Maine, which suggests a reliable potential source of new funding for the tier program,” they wrote in the report. “Maine currently places a $2.00 per pack tax on tobacco, resulting in $145 million in revenue in 2023. Given the size of this industry, an incidental $0.05 per pack additional tax would generate $7.25 million annually. This, too, would serve as a reliable potential source of new funding for the program.”
Maine’s Dairy Stabilization Program provides payments to Maine dairy farmers to help offset the rising costs of milk production, giving them up to $23 per every 100 pounds of milk, depending on the size of the operation. But advocates say the funding doesn’t go far enough to help plug the gap between federal pricing and the cost of production.
Maine’s dairy sector supports 14,600 jobs and provides over $835 million in total wages, according to the report. Dairy sales contribute about 155 million a year in sales tax proceeds to the state. Combined, Maine’s dairy cattle and milk production accounted for $146.8 million in direct sales and had a statewide economic impact of $230 million, the report’s authors noted.
The report’s authors said Maine’s dairy industry is struggling to stay afloat amid a range of pressures including market instability, inflation, processing constraints, supply chain disruptions and labor shortages. The number of dairy farms in the state has shrunken from 602 in 1994 to about 140, according to the report.
Maine lawmakers have pumped more money into the milk stabilization program in recent years, but dairy industry officials say that funding doesn’t go far enough and is dependent on the annual budget process.
