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Sequestration Has Impact on Dairy Farmers

April 8, 2013

Across the board cuts to federal spending known as “sequestration” began to be implemented on March 2. These cuts, enacted by Congress as part of the Budget Control Act of 2011, apply to nearly all of the farm programs operated by USDA.

While many questions remain about the implementation of the cuts, one immediate result was the suspension of the National Agricultural Statistics Service (NASS) monthly Milk Production reports, and the annual Milk Production, Disposition and Income report. NMPF sent a letter to USDA on March 14, citing the importance of these reports to dairy farmers, and requesting that Secretary Tom Vilsack restore publication of the reports.

In response to NMPF’s criticisms, NASS said last Wednesday that it will compile a partial monthly production report. The use of various administrative data to establish the monthly estimates of milk production will provide a consistent estimation process across all states and the nation, while maintaining cost savings by not conducting the producer survey, according to NASS.

Another program originally expected to be impacted was the MILC program, but on March 19, Secretary Vilsack officially notified Congress that he intends to use his authority to reduce direct payments (due to be paid to producers by Oct 1, 2013) by not more than 8.5% in order to fully fund programs such as MILC. This authority cannot be enacted until 30 days after congressional notification. It is important to note that direct payments would have been subject to cuts of 5.1% as a result of sequestration regardless of this action by the Secretary. These additional cuts to direct payments avoid having the more than 350,000 producers who had already received disaster, SURE, NAP and MILC payments this year to repay some of those funds. Additionally, no additional cuts to MILC will be made as a result of sequestration.