The milk income loss contract program debuts

August 16, 2002

By Michael Kaufman

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This week marks the beginning of the Milk Income Loss Contract (MILC) program, which was authorized by the Farm Security and Rural Investment Act of 2002. Starting Aug. 13 dairy farmers are able to sign up for compensation when domestic milk prices fall below a specified monthly average. This USDA program will provide price support payments from the Commodity Credit Corporation to dairy producers when the average monthly price of Class I milk in Boston falls below $16.94 per cwt. This milk price standard will apply to all participating dairy operations nationwide, up to a maximum of 2.4 million pounds per operation each year. By limiting the amount of milk eligible for price supports smaller family dairies can be helped nearly as much as larger operations.

Since environmental stewardship is important to livestock operations, participants in the MILC program will be required to comply with all highly erodible and wetland conservation provisions. Dairy operations will also be defined the same as they were under the old Dairy Market Loss Assistance program. Producer eligibility will be retroactive to Dec. 1 and calculated payments for past months will be available as early as October. During the next fiscal year dairy operators will be able to choose when they want to start receiving their MILC payments. The subsidy payment rate will be 45 percent of the difference between $16.94 and the monthly average of the Boston Class I milk price.

The autumn months will be busy for farmers and Farm Service Agency (FSA) personnel as well. In an effort to deliver farm bill programs in a timely manner, FSA is attempting to simultaneously execute sign-ups and producer payments for a variety of programs. Commodity producers will also be receiving their Summary Acreage History Reports in the mail soon. If producer records are up-to-date, the sign-up process for direct and countercyclical payments will go smoothly, with little need for acreage adjustments. Producers with incorrect information on their acreage history report will have to contact their FSA office before the end of August to make the necessary changes. Everyone needs to prepare the best they can for October activity, both in the FSA office and on the farm.

Larry Adams is the Ohio Farm Service Agency State Executive Director and Michael Kaufman is the Farm Service Agency Regional Public Affairs.

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