MILC helps support dairy farms

USDA’s Milk Income Loss Contract Program, administered by the Farm Service Agency, compensates dairy producers when domestic milk prices fall below a specified level. The 2008 Farm Bill authorized MILC through Sept. 30. The program has no set funding level.

Eligible dairy producers are those who, beginning Oct. 1, 2007, through Sept. 30, 2012, commercially produce and market cow milk in the U.S., or produce milk in the U.S. and commercially market the milk outside the U.S. Dairy producers must be in compliance with USDA’s Highly Erodible Land and Wetland Conservation provisions to participate. Dairy producers are subject to the Adjusted Gross Income limitation. If nonfarm income exceeds $500,000, the operation and the producer aren’t eligible for MILC benefits.

Beth Grabau, public information specialist at the state FSA office in Des Moines, answers the following questions. For more information, contact a county FSA office or visit www.fsa.usda.gov.

Question:
The last time a Milk Income Loss Contract payment was made was for April 2010 production. Prices haven’t fallen to a level to trigger an MILC payment, but dairy producers need to be aware of the program requirements should this occur. My operation itself hasn’t changed, but what about the program since the last payment?

Answer: To prepare in the event a payment is triggered, producers should notify their local FSA office of any changes to the dairy operation since April 2010. New dairies that haven’t previously participated in the MILC program need to complete a CCC-580, Milk Income Loss Contract, to be eligible for participation. They also need to select a start month for which the Commodity Credit Corp. will begin issuing payments to the dairy operation. Current dairies participating in MILC can make changes to their start month with certain restrictions.

If a payment is announced by USDA, dairy producers enrolled in MILC must provide their local county office with documentation showing the eligible commercial milk marketings for the months with an MILC payment rate in effect. MILC compensates dairy producers when domestic milk prices fall below a specified level. Eligible dairy producers can apply for program benefits anytime through Sept. 30.

To maintain program eligibility, MILC participants must notify the local FSA office of any operation changes, such as a change in producer, shares, address or bank routing/account numbers for direct-deposit purposes. In order for dairy producers to receive an MILC payment, they must meet adjusted gross income requirements by completing a CCC-931, AGI Certification and Consent to Disclosure of Tax Information. Other eligibility documents must also be on file. Contact your local FSA office for more information on any documents you may need to complete.

Question:
I hear this discussion about start dates. I selected a February start month some time ago. Can I change my start date to March? If so, when does this need to be done?

Answer: When producers enroll in MILC, a payment start month is selected. This month remains the same through all program years, unless a change is requested by the operation. Producers who wish to change their MILC program start month can do so an unlimited number of times throughout their enrollment, provided the changes are made on or before the 14th day of the month prior to the new MILC production start month. The production start month designated can’t be changed if the new month being selected has already begun or has already passed.

In your case, it’s too late to change your February 2012 start month to March 2012 because the change request had to be done by Jan. 13, 2012.

Generally, start dates affect producers who believe they will be exceeding the maximum eligible pound limit that has been set for the program. For most of the 2012 fiscal year, the cap has been set at 2.985 million pounds; the exception is September 2012, where the cap is 2.4 million pounds.

MILC participants must select a month of commercially marketed production for which FSA will begin issuing the operation’s payments for each fiscal year. Beginning 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 that is in effect. These payments will continue until the operation reaches the maximum payment quantity or the end of the fiscal year.

Changes to the dairy operation start month must be designated on FSA’s form, CCC-580M, Milk Income Loss Contract Modification.

Question:
Since there hasn’t been payment, I haven’t been providing production evidence to my local FSA office. What about those months where there are no payments? What do I need to provide now that a payment might be made in March?

Answer: Since there are months with no payment rates, zero pounds have been automatically added. If a rate is announced for March, it is for March milk production. Before MILC payments can be issued, all persons involved in the dairy operation must provide verifiable production evidence. This could include milk marketing payment stubs, tank records, milk handler records, daily milk marketings, or copies of any payments received as compensation from other sources.

Question:
I’m a new dairy producer and have never completed an MILC contract in the past. What are my options?

Answer: Since you are a new producer and there isn’t a past CCC-580 on file, you need to select a start month, which can be the same month as your application. Example: As a new producer, say you complete your new application on March 30, and since it’s a new application, you can select March 2012 as your start month. In this case, you wouldn’t be able to select an April start date since it is after March 14, 2012. But all you would have to do is wait until April 2, 2012, and select April 2012 as your start date.

Question:
I have a new operation, as I recently brought our son into the dairy. Should I complete a new CCC-580 and select a new start month? What is allowed?

Answer: Bringing a new member (family or not) into the operation isn’t considered a new operation. You have changed or modified the operation with this addition. A CCC-580M form showing the addition of the son will need to be completed. The start month will remain the same as the original contract unless other provisions for changing the start month have been met.

This article published in the April, 2012 edition of WALLACES FARMER.

All rights reserved. Copyright Farm Progress Cos. 2012.