By MEGGIE I. FOSTER
Assistant Editor INDIANPOLIS, Ind. — Dairy farmers from across the country can now take advantage of the reinstated safety net known as the Milk Income Loss Contract (MILC) program, designed to protect producers from tumbling milk prices.
“All producers should take advantage of this program,” said Mike Schutz, Purdue University Extension dairy specialist, who added that milk prices in January are hovering around a low $14. “You can select what months you what to take advantage of the program, and if you produce less than 2.9 million pounds of milk per year, which is about 145 cows, you will be covered all year long.”
The USDA’s Farm Service Agency (FSA) of Indiana announced local signup on Dec. 23 and said the program will continue through Sept. 30, 2012, according to Kenneth Culp, executive director of Indiana FSA.
“How MILC works is when milk prices are low (below $16.94 cwt.) producers are paid the difference between farm milk prices and standard pricing set by the government,” explained Schutz.
The MILC program was reauthorized with three major changes in the 2008 farm bill and will operate similarly to the counter-cyclical payment program for crops.
The first major change in MILC include an increase in the per operation poundage limit from 2.4 million pounds of milk produced and marketed, or about 120 cows to 2.985 million pounds or about 145 cows. The change is indicated under the USDA’s Commodity Credit Corp. (CCC) and is specified for each fiscal year from Oct. 1, 2008 through Aug. 31, 2012.
The second change in the new farm bill includes the MILC program payment rate, which adjusts the trigger price of $16.94 cwt., depending on the extent to which feed costs increase.
The third change is made through the addition of the feed cost adjuster element. The feed cost adjuster, is introduced over the life of the farm bill, which alters the $16.94 per cwt. benchmark price upward depending on the cost of feed rations. When available, MILC payments are based on a payment rate percentage that is multiplied by the difference between a now-flexible target ($16.94 per cwt. or higher) and the specific month’s Class I price of milk.
Culp said that the feed cost adjustment takes effect when the monthly National Average Dairy Feed Ration Cost is greater than $7.35 per cwt. beginning Jan. 1, 2008, through Aug. 31, 2012.
Calculations from Jan. 1, 2008, through Aug. 31, 2012, will be made at 45 percent of the percentage that the National Average Dairy Feed Ration Cost exceeds $7.35 per cwt.
According to Culp, the National Average Dairy Feed Ration Cost is calculated from the entire month prices published by the National Agricultural Statistics Service.
“With low feed costs right now, the feed cost adjuster probably would go into effect, but if feed costs increase above the amount indicated by MILC ($7.35 per cwt.), the percentage will increase, so then it could go above 45 percent,” said Schutz.
Beginning with new fiscal year marketings, which started Oct. 1, 2008, the 2008 farm bill made additional changes under payment eligibility to include an adjusted gross income (AGI) limit. Basically, the change states that if the individual or entity has annual non-farm AGI greater than $500,000, the individual is not eligible for MILC benefits.
During the signup application period, participating dairy producers must select the month of the fiscal year to start receiving payments for eligible production.
According to Culp, eligible dairy producers are those who commercially produce milk in the United States. To receive program approval, producers must enter into a MILC contract with CCC and provide monthly milk marketing data.
Dairy producers can apply for MILC at local FSA offices.
For additional rules and requirements on MILC, contact a local FSA office. |
