The United States Department of Agriculture Farm Service Agency has announced that because of low milk prices, the FSA will make payments in April to producers through the Milk Income Loss Contract program.

The 2008 Farm Bill made changes to the MILC program, most notably the addition of a dairy feed ration cost adjustment in addition to changes to the payment rate and modifications to the per-operation poundage limit, depending on when the milk is produced.

FSA will make MILC payments as a result of the low prices, but because of the changes to the program ordered in the 2008 Farm Bill, the payments might be higher but will take a bit longer to gather the required data before payments can be made.

The FSA makes MILC payments on a monthly basis when the Boston Class I milk price falls below $16.94 per hundredweight as adjusted for feed costs. The monthly Boston price is posted online at: www.fmmone.com/Northeast_Order_Prices/NE_Prices_mainnew.htm#Advance.

FSA determines the per hundredweight payment rate for the applicable month by subtracting the Boston Class I price for that month from the $16.94 MILC payment trigger price as adjusted for feed costs, and multiplying the difference by 45 percent. The payment factor of 45 percent will decline to 34 percent on Sept. 1, 2012.

The MILC payment trigger price of $16.94 is adjusted upward when the National Average Dairy Feed Ration Cost for a month is greater than $7.35 per cwt. This rate will change to $9.50 on Sept. 1, 2012.

The dairy feed ration cost is calculated each month from the price of feed ingredients used to create a 16 percent protein dairy feed as reported by the National Agricultural Statistics Service.

While the dairy feed ration cost adjustment benefits producers when feed costs are high, it also means the FSA must wait until that month's national average dairy feed ration cost is known before the MILC payment rate can be calculated.

For example, while the Boston Class I price for February is $13.97 and below $16.94, the FSA still won't know the actual MILC payment rate until late March when the final figures from NASS are received for determining the national average dairy feed ration cost. That means the MILC payment for February cannot be made until April.

FSA issues payments no later than 60 calendar days after FSA receives production evidence for the applicable month or the entire month's national average dairy feed ration cost is posted for the applicable month, whichever is later.

The FSA makes payments on up to the maximum eligible pounds of milk produced and marketed by each operation per fiscal year. The annual maximum eligible pound limit per dairy operation is 2,985,000 pounds per fiscal year. The amount drops to 2.4 million pounds per fiscal year on Sept. 1, 2012.

Ag humor

A group of Canadians was traveling by tour bus through Holland. As they stopped at a cheese farm, a young guide led them through a process of cheesemaking, explaining that goat's milk was used. She showed the group a lovely hillside where many goats were grazing. These, she explained, were the older goats put out to pasture when they no longer produced. She then asked, "What do you do in Canada with your old goats that aren't producing?" A spry old gentleman answered, "They send us on bus tours."

Luke Fritz is executive director of the Butler County Farm Service Agency.