The U.S. Department of Agriculture has announced the implementation of the new Dairy Economic Loss Assistance Payment program. The 2010 Agricultural Appropria?tions Bill authorized $290 million for loss-assistance payments to eligible dairy producers.
Milk prices declined substantially through early-to-mid 2009, with the national price for milk averaging $16.80 per hundredweight (cwt.) in the fourth quarter of 2008 and averaging $12.23 per cwt. in the first quarter of 2009?a 27 percent decline.
On average, the price U.S. dairy producers received for milk marketed in the summer of 2009 was about half of what it cost them to produce milk.
Eligible producers will receive a one-time direct payment based on the amount of milk both produced and commercially marketed by their operation during the months of February through July 2009.
Production information from these months will be used to estimate a full year?s production for an operation to calculate the payments, using a per-dairy operation limit of 6 million pounds.
Dairy producers who have production records at the USDA Farm Service Agency county office because they are participating in the Milk Income Loss Contract dairy program do not need to apply for the program. FSA will use existing production records for February through July 2009 to calculate and issue their payments.
Producers who have not provided production data for those months to FSA have until Jan. 19 to apply. FSA officials estimate that more than 95 percent of eligible producers will receive benefits without having to fill out a new application.
A national per-hundred-weight payment rate will be determined by dividing the available funding of $290 million, less a reserve established by FSA, divided by the total pounds of eligible milk production approved for payment.
Based on current information, FSA estimates that 875 million cwt. of milk production will be eligible for payment. The reserve will cover new applicants. The expected payment rate is about 32 cents per cwt.
To be eligible for DELAP, the dairy producer and the dairy operation in which the producer has a share:
? must have produced milk in the United States and marketed milk commercially at any time from February through July 2009:
? must have milk production data for those months;
? must not have an annual average adjusted gross nonfarm income of more than $500,000 for calendar years 2006 through 2008.
Through much of this past year, USDA took a number of steps to provide relief to dairy farmers around the country. Some of these steps include:
? USDA reactivated its Dairy Export Incentive Program to help U.S. dairy exporters meet prevailing world prices in addition to encouraging the development of international export markets in areas where U.S. dairy products are not competitive due to subsidized dairy products from other countries.
? USDA spent about $1 billion in fiscal year 2009 on purchases of dairy products and payments to producers through MILC.
? USDA increased the amount paid for dairy products through the Dairy Product Price Support Program by about $243 million.
? In March, USDA transferred about 200 million pounds of nonfat dry milk to USDA?s Food and Nutrition Service, which will not only remove inventory from the market, but also support low-income families struggling to put food on their tables.
Bill Harmon is executive director of the Marion County FSA office.