New dairy program to benefit small operations

By LORI COPE | East Texas Edition

Evening drink ... This dairy cow is just one of thousands in Texas found on small, family-owned farms. The new MILC program was created to help dairy farms when milk prices are low. Sign up for the program is under way. -- Staff photo by Kristy Hemmingsen

August 22, 2002 -- A provision in the 2002 Farm Bill is becoming a reality for dairy producers - one that will be most beneficial to small operations.

Under the Milk Income Loss Contracts (MILC) program, eligible dairy producers will be financially compensated when milk prices fall below a specified level.

Sign up for MILC began Aug. 13, and the program is to run through Sept. 30, 2005. The MILC program is retroactive to milk produced after Dec. 1, 2001.

To be eligible, the dairy producer must be a U.S. citizen and market their milk commercially. Under the program, the U.S. Department of Agriculture, through the county-level Farm Service Agency (FSA), will make payments to producers as long as the Class I milk price is below the specified level of $16.94 per hundredweight in Boston, Mass.

Statistics show the Class I milk price has been below the Boston price every month since the farm bill was enacted.

"This program will aid smaller dairy farmers the most because it imposes a cap on milk eligible for payment," said Robert Garcia, Hopkins County FSA county executive director. A ceiling of 2.4 million pounds per dairy operation is written into the program.

Hopkins County has the most dairy producers in the state - 164, according to July 2002 statistics.

"This program is designed to help the small dairy farm, and Hopkins County, and Northeast Texas, has quite a few of those. This program helps them (dairy farmers) when prices are low," Garcia added.

For instance, the August average price is $13.73. Under current conditions, dairy producers will receive $1.45 per hundredweight of milk sold in August. (A calculator for determining price and payment is online at www.fmmone.com.)

Although sign up is under way now at county FSA offices, Garcia reminds producers it will be the middle of October before the county offices even receive the software so FSA staff can "load the applications" that are initially completed manually.

Once all applictions are loaded into the computer, payments will be issued from the county FSA office.

"What dairy producers need to do now is come in to the FSA office for their county, with their production records back through Dec. 1, 2001, and fill out the application," Garcia said. FSA staff will also be able to answer questions the producers may have.

The question some producers have had regarding the specified price being based on milk in Boston, Mass, was recently answered by a dairy analyst in Missouri. "That was the benchmark used in determining the price paid to dairy farmers in the Northeast Dairy Compact under the old farm bill. That payment mechanism was carried forward and applied nationally."

Garcia added there may be changes to the MILC program's rules as any problems or issues are addressed by USDA.