Sec. 1. 7 MRSA §§3153-B and 3153-C are enacted to read:

§3153-B. Dairy stabilization funding

1. Tiered price support program.__Beginning July 1, 2004, the administrator of the Maine Milk Pool shall distribute to each milk producer in the State an amount of money that represents the difference between the target price of milk and the base price of milk in the previous month, calculated on an annual production per hundredweight basis as set forth in subsection 3.

The Maine Milk Commission shall calculate the target prices at the short-run break-even point using the most recent Maine producer cost-of-production data, as compiled and updated every 3 years by the Maine Milk Commission.__The Maine Milk Commission shall set 3 tiers of target prices to reflect the cost-of- production study models of small, medium and large farms.

2.__Base price calculation.__For purposes of this section, the base price of milk is the Suffolk County, Massachusetts statistical uniform price of milk as determined for each month by the Northeast Market Administrator of the United States Department of Agriculture, plus amounts paid to milk producers in the State that result from premiums established by the Maine Milk Commission. In calculating the amount to be paid, there must first be a deduction representing any Federal Government payment received for the month due to low milk prices. Maine Milk Commission cost-of-production adjustments may not be considered premiums when determining the base price.

3. Production total. For purposes of this section, annual production is the total production in hundredweight for the 12- month period commencing June 1st and ending May 31st of each subsequent calendar year.

4.__Repeal; review by joint standing committee.__This section is repealed June 30, 2007. The joint standing committee of the Legislature having jurisdiction over agricultural matters shall review the tiered price support established under this section and present its recommendations regarding this section to the Legislature no later than March 1, 2007.

§3153-C.__Milk Income Loss Contract

1.__Milk Income Loss Contract.__The administrator of the Maine Milk Pool shall make payments to those milk producers in the State whose annual production exceeds the limit under the federal Milk Income Loss Contract but does not exceed an annual