MILC Payments Expected Next Month

January 4, 2013 — It looks like 2013 is essentially going to be a repeat of 2012. DairyBusiness Update’s Dave Natzke joined us today to discuss how the Farm Bill extension legislation affects the Milk Income Loss Contract payment program:

As a review, the legislation approved by Congress extends the Dairy Export Incentive Program (DEIP) and forward contracting programs until Sept. 30, and the Dairy Product Price Support Program (DPPSP) Dec. 31. That action essentially suspends the Agricultural Act of 1949, which some said threatened to double retail milk prices by requiring the government to purchase milk at a percentage of parity.

That leaves the MILC payment program as the major economic safety net. The program, which provides a government payment to dairy farmers when triggered by low milk milk prices, was also extended through the end of the current fiscal year.

MILC payment formulas will mirror the 2012 schedule, with payments equal to 45% of the difference between the Class I price trigger and the actual Class I price. There’s also a feed cost adjuster to supplement payments when feed prices are high, and a payment cap based on annual milk production.
Based on current milk and feed futures prices, early calculations from Dr. Brian Gould, at the University of Wisconsin-Madison, indicated dairy farmers will receive small monthly payments beginning in February and lasting through July 2013.

What remains unclear, Bill, is what happens to larger producers, who must declare a “start month” to begin receiving payments. That’s because there’s a chance there could be a very small retroactive payment for last October, which was the first month of the new fiscal year.

Dairy producers are urged to check with their county USDA Farm Service Agency offices for more updates.

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