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Milk Income Loss Contract
WASHINGTON, Dec. 19, 2008 - USDA's
Farm Service Agency (FSA) announced that signup for
the Milk Income Loss Contract Program (MILC) begins
Dec 22 and will continue through the program's expiration
date, Sept 30, 2012.
The 2008 Farm Bill reauthorizes the MILC Program, which
operates similarly to the counter-cyclical payment program
for crops, and makes three key changes in program operation.
Under the 2008 Act, the MILC payment rate and the per-operation
poundage limit are modified, depending on when the milk
is produced. In addition, a "feed cost adjuster,"
is introduced over the life of the 2008 Act, which adjusts
the $16.94 per hundredweight (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 Boston Class I price of milk.
USDA's Commodity Credit Corporation (CCC) issues MILC
payments on an operation-by-operation basis up to a
maximum of 2.4 million pounds of milk produced and marketed
(about 120 cows) from Oct. 1, 2007, through Sept. 30,
2008. The production limit per operation increases to
2.985 million pounds (about 145 cows) for each fiscal
year from Oct. 1, 2008, through Aug. 31, 2012. The production
limitation reverts back to the original limit of 2.4
million pounds per fiscal year in Sept. 2012.
The 2008 Act adjusts the trigger price of $16.94 cwt.,
depending on the extent to which feed costs increase.
The feed cost adjustment takes effect when the monthly
National Average Dairy Feed Ration Cost (calculated
from the "entire month" prices published by the National
Agricultural Statistics Service) 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.
Beginning with Fiscal Year 2009 marketing, which started
Oct. 1, 2008, the 2008 Act made changes to the provisions
for payment eligibility to add an adjusted gross income
(AGI) limit. If the individual or entity has annual
non-farm AGI for the relevant base period greater than
$500,000, the individual or entity is not eligible for
MILC benefits. The base period will be set pursuant
to AGI regulations yet to be issued. That rule will
also define what is considered to be non-farm income.
During the signup application period, participating
dairy operations must select the month of the fiscal
year to start receiving payments for eligible production.
Producers submitting a contract application within 30
days of the beginning of the application period can
select any preceding month as the start month. Producers
submitting contract applications after Jan. 21, 2009,
will not have the option of selecting an earlier month
as the payment start month for the dairy operation for
a fiscal year; and will be limited to applicable start
month selection rules. Those general rules are that
the start month must either be the month the contract
is submitted or some later month. Changes in the month
may be made from year to year so long as the designation
is made by the fourteenth of the month proceeding the
new start month. Pound limits run from the start month
and all pounds for which payment is received count against
the limit for that fiscal year.
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.
All payments in the program are subject to limits in
the contract, regulations, and to changes in statutory
provisions for payment.
Resource: Michigan Department of Agriculture
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