Payment expected to be 32¢/cwt. under Dairy Economic Loss Assistance Payment program, includes a 6 million lbs. production cap
WASHINGTON, Dec. 17, 2009 – U.S. Agriculture Secretary Tom Vilsack announced the implementation of the new Dairy Economic Loss Assistance Payment (DELAP) program. The 2010 Agricultural Appropriations Bill authorized $290 million for loss assistance payments to eligible dairy producers.
“Through this program, eligible dairy producers will receive economic assistance that will help stabilize their operations during these tough economic times,” said Vilsack. “I have personally heard from hundreds of struggling dairy farmers from all across our country who have been hit hard by declining prices over the past year, and now, we’ll be able to offer them help.”
Milk prices declined substantially through early-to-mid-2009, with the national price for milk averaging $16.80/cwt. in the fourth quarter of 2008, and averaging $12.23/cwt. in the first quarter of 2009, a 27% 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 6 million lb. per dairy operation limit.
Dairy producers who have production records at USDA Farm Service Agency (FSA) county office because they participated in another FSA 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, and have not already been contacted by FSA to provide such data, have 30 days, until Jan. 19, 2010, to apply. FSA officials estimate that more than 95% of eligible producers will receive benefits without having to fill out a new application.
A national per hundredweight 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 and appeals. The expected payment rate is approximately 32¢/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 certify to all milk production produced and marketed by the dairy operation during that time.
Also, any dairy producer who has an annual average adjusted gross nonfarm income of more than $500,000 for calendar years 2006 through 2008 is not eligible for DELAP.
For more information and eligibility requirements on the new DELAP program, please visit your local FSA county office or www.fsa.usda.gov.
Previous USDA steps
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 USDA’s Dairy Export Incentive Program (DEIP), 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 approximately $1 billion in fiscal year 2009 on purchases of dairy products (Dairy Product Price Support Program) and payments to producers (Milk Income Loss Contract (MILC).
• USDA increased the amount paid for dairy products through the Dairy Product Price Support Program (DPPSP). USDA estimates that these increases, which were in place from August 2009 through October 2009, increased dairy farmers’ revenue by approximately $243 million.
• In March, USDA transferred approximately 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 nutritious food on their tables.