NMPF Projected MILC Payments
The Milk Income Loss Contract (MILC) program was reinstituted in the Farm Bill extension passed by Congress and signed by the President at the beginning of January 2013. MILC has been extended through August 31, 2013 at a payment rate of 45%, covering 2.985 million total pounds of milk per year with a feed adjuster factor of $7.35. In September 2013, the payment rate falls to 34%, the milk production covered drops to 2.4 million total pounds, and the feed adjuster factor goes up to $9.50.
Dairy operations that have not already selected the month they want MILC payments to start have until the 15th of the prior month to indicate the month in which they want MILC payments to start. For more information, please visit the USDA website.
As a convenience, below are NMPF's own projections for possible payments, but these are not to be considered absolute. NMPF holds no responsibility for farmers making decisions based on these projections since only USDA has the final authority about the numbers, which can change drastically based on unexpected economic conditions. (Now that the initial February 28 sign-up deadline has passed, we will go back to updating our own MILC projections once per month.)
Forecast based on CME futures as of 6/07/13
What is the Milk Income Loss Contract (MILC) Program?
Payments under the MILC program are triggered when the Class I price in Boston falls below $16.94 per cwt. The base payment rate is any positive difference between $16.94 and the Class I milk price at Boston times 45%.
There is also a “feed cost adjuster,” which could only increase the payment. When the price of a hundredweight of dairy feed rises, say, 10% above its target of $7.35/cwt., the $16.94 target for Boston’s Class I price is adjusted up by 10% x 45% = 4.5%. (This 45% is feed’s rough share of milk costs.)
Payments under the program are limited by production. Producers are eligible to receive payments on up to 2.985 million pounds per fiscal year. Dairy farmers producing more than that amount annually may choose the month in which they want to start receiving payments; after that, they receive payments for all months until they reach their cap. Months with no MILC payment don’t count against the milk production cap.