Spilling Pennies
April 5, 2016

MILC Payments Would Have Been Triggered in February

 |  By: Jim Dickrell

If dairy farmers were operating under the old Milk Income Loss Contract (MILC) program, they would have been eligible for a 2.3¢/cwt payment in February, according to John Newton, senior director of economic research with the National Milk Producers Federation.

Some dairy farmers have been pining for the old program, assuming they would receive payments because of lower milk prices.

“[February] is the only month throughout this downturn that MILC would have been triggered,” Newton  says. “Assuming feed prices remain at or below the most recent levels, MILC is unlikely to be triggered in March or April as both Class I monthly prices are above $16.94.”

Recall that under the MILC program, payments were triggered when the Class I price in Boston fell below $16.94.  Farmers were paid 45% of the difference below that trigger level.

There is frustration that the current Margin Protection Program for dairy has not paid indemnities even though milk prices are 30% lower than last year. In February, the milk-feed margin under the program was $7.91/cwt. But because indemnities are calculated on a two-month average and the January margin was $8.10, no payments were triggered.

In contrast, MILC payments were triggered in most of 2009 and 2012, and part of 2013. They were repealed with the 2014 farm bill.