Producers should review Milk Income Loss Contract
By Daniel Root
daniel.root@mn.usda.gov
Date Modified: 09/22/2011 8:54 AM
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USDA's Milk Income Loss Contract Program (MILC), administered by the Farm Service Agency's (FSA), compensates dairy producers when domestic milk prices fall below a specified level. The 2008 Farm Bill authorized MILC through Sept. 30, 2012.
Eligible dairy producers are those who, beginning Oct. 1, 2007, through Sept. 30, 2012:
Commercially produce and market cow milk in the United States; or
Produce milk in the United States and commercially market the milk outside the United States.
Dairy producers must be in compliance with Highly Erodible Land and Wetland conservation provisions. Dairy producers are subject to the Adjusted Gross Income (AGI) limitation. If non-farm income exceeds $500,000 the dairy operation and the dairy producer are not eligible for MILC benefits.
Sign-up
Sign-up for the program began Dec. 22, 2008, and extends through the conclusion of the program on Sept. 30, 2012. Eligible dairy producers can apply for program benefits anytime during sign-up.
Payments
FSA makes MILC payments on a monthly basis when the Boston Class I milk price falls below $16.94 per hundredweight (cwt) as adjusted by the dairy feed ration adjustment. The monthly Boston price is posted online at: http://www.fmmone.com/Northeast_Order_Prices/NE_Prices_main_new.htm
When the Boston milk price exceeds $16.94 as adjusted by the dairy feed ration adjustment:
FSA will make no MILC payments to the dairy operation; and
Production for that month will not count towards the operation's maximum eligible production
Eligible Pounds of Production
FSA issues payments up to the maximum eligible pounds of milk produced and marketed by each operation per fiscal year. The annual maximum eligible pound limit per dairy operation per fiscal year is as follows:
Oct 1, 2007 - Sept. 30, 2008 - 2,400,000 lbs
Oct 1, 2008 - Aug. 31, 2012 - 2,985,000 lbs
(Except that for fiscal year 2012, the fiscal year cap to qualify Sept. 2012 production only will be reduced to 2.4 million pounds).
Payment Rates
FSA posts monthly MILC payment rates online at: http://www.fsa.usda.gov/FSA/webapp?area=home&subject=prsu&topic=mpp-mi
Production Start-month Selection
MILC participants must select a month of commercially marketed production for which FSA will begin issuing the operation's payments for each fiscal year.
Starting with the dairy operation's selected month, FSA will issue MILC payments based on the month's production and each consecutive month's production thereafter at the payment rate applicable to each month with a rate in effect, until the earlier of the following:
The operation reaches the maximum payment quantity; or
The applicable fiscal year ends.
Production Start-month Selection Rules
The dairy operation's selected production start-month must be designated on Form CCC-580, "Milk Income Loss Contract Program (MILC)," and submitted to the FSA county office:
On or before the 14th day of the month before the selected MILC production start-month, except as otherwise provided during the applicable sign-up phase; and
Before the selected month's Boston Class I fluid price is announced to the public; or
The dairy operation has the option to select the month in which the contract application is submitted as a production start month.
A dairy operation cannot select a MILC production start-month for any month that:
Has already begun, except as otherwise provided;
Has already ended; orMilk was not produced by the dairy operation.
Exception: If the contract is submitted within 30 days of the time at which CCC begins accepting contracts, the dairy operation can select any month preceding the month the contract is submitted or any month thereafter in accordance with the "Selecting and Changing Production Start-month" paragraph below, as the 2009 production start month, including the month the contract is submitted.
Selecting and Changing Production Start-months
Dairy operations can change the start-month an unlimited number of times as long as the change is made:
On or before the 14th day of the month prior to the MILC production start-month (unless that day falls on a weekend, then the date falls to the previous business day);
Before payment is sought; and
Before the original selected MILC production start-month has passed.
If the dairy operation never changes the selected start-month, the start-month will remain the same throughout the MILC contract's duration.
It is very important that dairy producers review their MILC contract or contact your local FSA office to determine if you would like to change your production start month. If a dairy operation is estimated to exceed the maximum number of pounds they can get paid on, they will want to pay close attention to the prices to ensure they can earn their maximum payments.
If you have any questions in regards to your MILC contract, please don't hesitate to contact your local FSA Office.