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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MILC payments are made only on the first 2.985 million pounds of annual milk production per farm (about the amount produced by 150 dairy cows).
However, although MILC payments will continue through June 30, 2014, at a 45 percent payment rate.
The MILC program was slated to expire on September 30, 2012 but was later extended retroactively by the American Taxpayer Relief Act of 2012, which authorizes MILC payments through September 30, 2013.
For example, the net expected subsidy capture for the DSA $6.50 margin trigger coverage is over $104,000 for a 1,000-cow dairy, while total expected MILC payments are only about $9,000.
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. "These increases likewise do not signify reform, result in more market distorting policy, and increase government costs," it said.
Meanwhile, International Dairy Foods Association said it was disappointed with the higher payment rate and increased volume of milk production eligible for MILC payments and expressed concern with a requirement for daily mandatory dairy product price reporting as "unnecessary and unduly burdensome."
109-171) extended MILC program authority for two years, through September 30, 2007, but prohibits any MILC payments beyond August 31, 2007.