Milk Income Loss Contracts Payments

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Milk Income Loss Contracts Payments

Commonly called MILC payments. In the United States, a program to pay dairy farmers when the price of milk falls below a certain level. The program is intended to keep dairy farmers in business during difficult times. This in turn keeps the supply of milk from radically declining, which can cause large price fluctuations. The U.S. Department of Agriculture administers the program.
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However, although MILC payments will continue through June 30, 2014, at a 45 percent payment rate.
It also objected that the bill would increase the payment rate for the Milk Income Loss Contract (MILC) program and increase the quantity of milk that is eligible to receive MILC payments.
It also raises the annual milk volume qualifying for MILC payments, from 2.
These changes would reduce MILC payments from $672 million, the average annual cost under the 2002 Farm Bill, down to an estimated $79 million annually.
To make matters worse, MILC payments to farmers are highest when the price of milk is lowest, preventing consumers from reaping the full benefit of cheaper groceries when they are available.
The administration proposes shifting MILC payments away from current production, which is partially consistent with IDFA's call for programs de- coupled from price and production; however, the proposal does not go far enough to help ensure a healthy dairy industry for the future or provide an adequate dairy farmer safety net.
Unlike MILC payments, they are not tied to milk prices," she continued.
There are major drawbacks to the program in today's marketplace -- especially when you combine it with MILC payments," Tipton said.
Through September 2005, USDA reported over $2 billion in MILC payments were made to dairy producers.
At the same time, the Dairy Price Support Program, which creates a price floor for farmers, has been used by USDA in recent years to buy up the extra milk production caused by the MILC payments.