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MILC program helps dairy farmers cope with falling milk prices

Published Feb. 26, 2009 | Discuss this article on Facebook
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Dairy producers are being encouraged to sign up for an old dairy program to help them cope with falling milk prices.

The Milk Income Loss Contract (MILC), which was initially authorized in the 2002 Farm Bill, provides monthly payments to producers when market prices drop below the program’s defined trigger price, said Cameron Thraen, a dairy economist with Ohio State University Extension. When the market price drops below the trigger price, the difference between the two is calculated and farmers receive 45 percent of that difference.

“It was put into place at that time because milk prices were also quite low and pressure on dairy farms was pretty high financially,” Thraen said.

He said decreased domestic and global demand has caused milk prices to tumble nearly 35 percent in just a few weeks.

MILC is now in the 2008 dairy title of the Food, Conservation and Energy Act. Thraen said the program has two changes: it now includes a feed cost adjuster and has increases in both the payment rate and production eligibility among small to medium-sized dairy farms.

The production cap to remain eligible has been raised from 2.4 million pounds to 2.985 million pounds annually, Thraen said. Once a dairy farm’s monthly milk shipment reaches the cap, the producer is no longer eligible to receive payments for the current fiscal year.

“That really extends the reach of the program,” he said. “I’ve calculated that in Ohio that moves the program eligibility up from 125 cow herds to up to 165 cow herds.”

MILC program sign-ups began Dec. 22. Producers can sign up anytime this year but must do so the month before they want to enter the program. Producers should contact their local Farm Service Agency to sign up for the program. Those who have participated in the previous MILC program need to re-enroll.

With rising feed and fuel costs, dairy producers could have “substantial payments” over the next few months, Thraen said.

“I’ve calculated out … that over the year this could average $1.60 a hundredweight on the eligible milk production. The highest ones look like in February, March and April where a MILC payment could be around $1.90 to a little over $2 a hundredweight.”

Thraen encouraged producers to sign up for MILC soon.

“Any producer who is not signed up for the program or is not thinking about signing up is missing an excellent opportunity,” he said.



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