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August 31, 2018

How Much Will You Get in Dairy Tariff Relief?

 |  By: Jim Dickrell

The United States Department of Agriculture’s (USDA) announcement this week of a 12¢/cwt “Market Facilitation Program” (MFP) payment means your actual payment, obviously, will be based on the number of cows you milk.

 

Annie AcMoody, director of Economic Analysis for Western United Dairymen, ran the numbers for California producers. The analysis is based on California’s average annual milk per cow of 22,755 lb. She calculated:

 

Dairy size:                                         Estimated payment

   250                                                  $3,413

   500                                                  $6,826

1,000                                                  $13,653

1,500                                                  $20,479

2,000                                                  $27,306

3,000                                                  $40,959

4,000                                                  $54,612

 

The payment cap of $125,000 suggests herds of up to about 9,000 cows would receive an MPF payment before hitting the payment ceiling. Note: There is also a requirement that a producer’s adjusted gross income cannot exceed $900,000. It’s unclear how many operations would hit that cap given recently low milk prices.

 

Back calculating for smaller herds, and assuming the same production per cow, means a 60-cow herd would receive just $820 and a 100-cow herd would receive $1,365.

 

Keep in mind, too, that the payments will be based on a herd’s Margin Protection Program production history, which in turn is based on their highest level of total milk production in 2010, 2011 or 2012.

 

The low rate of payment per hundredweight actually works in California’s favor, notes AcMoody. “Using a higher dollar value on a very low cow number per operation would have placed a disproportionate amount of funds in states other than California. For once, we stand a chance of getting a fairer share.”

 

Farmers can begin applying for their MFN payments September 4 at their Farm Service Agency office.

 

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