To amend the Farm Security and Rural Investment Act of 2002 to extend contracts for national dairy market loss payments through fiscal year 2007, to increase the payment quantity authorized under such contracts, and for other purposes.

H.R. 1260 proposes to extend and expand the Milk Income Loss Contract (MILC) program, which provides financial assistance to dairy farmers when milk prices fall below a certain level. The bill would extend the program through September 2007 and double the amount of milk production eligible for payments, while also increasing the overall payment rates for participating farmers. For citizens, this legislation is designed to provide a stronger financial safety net for small and mid-sized dairy operations to help them remain viable during periods of low market prices.