Sinking milk prices and increasing feed costs this spring have added an extra challenge for dairy farmers readying to plant crops. But theyll have to wait until May to receive reimbursement checks from Uncle Sam to help shore up their losses.
The Milk Income Loss Contract program which expired with the 2008 federal farm bill last September was reinstated by Congress for nine months Jan. 1 with an extension of the bill. From Jan. 1 through Aug. 31, farmers will receive MILC payments based on the way they were calculated in August. Farmers receive subsidies when national milk prices fall below $16.94 per 100 pounds.
But those payments wont kick in until May, said Robert J. Gray, executive director of the Council of Northeast Farmer Cooperatives. Farmers are expected to be paid retroactively for the months of March and April based on national milk prices; they wont be paid for January and February, because milk prices were higher during that period. March payments are expected to be in the range of 65 to 70 cents per hundredweight.
Payments for 2013 were delayed by the U.S. Department of Agriculture, Mr. Gray said, because it had to decide which programs it would cut when federal budget cuts, called sequestration, started March 1. Instead of cutting MILC payments, though, Agriculture Secretary Thomas J. Vilsack opted to scale back a crop subsidy called direct payments. Those subsidies paid to landholders regardless of whether they farm were cut by 8.5 percent. That program accounted for about $5 billion in 2012. Rep. William L. Owens, D-Plattsburgh, called the delay in MILC payments just one example of the harm sequestration has caused in the north country.
Delaying MILC payments creates a real cash-flow issue for dairy farmers, he said in an email. From farmers to border patrol to civilian employees at Fort Drum, there are real people counting on Congress to get back to work and replace sequestration with a responsible mix of federal spending cuts and new revenue. Its my hope that leaders in Washington will do exactly that in the weeks ahead.
Farmers are unhappy about the delay because they need cash during the spring to cover the costs of seeds and fertilizer, said Arthur F. Baderman, agriculture educator at the Jefferson County Cooperative Extension. He calculated that a dairy farm with 500 cattle would receive a MILC subsidy for March of $7,350 a hefty sum for those in a tight financial squeeze.
Your highest crop expenses are in the spring, Mr. Baderman said. Farmers want to get this money now to offset costs or make payments, so when the weather breaks, everything is ready to go and you arent holding off to wait for the money.
Philadelphia dairy farmer Michael B. Kiechle said MILC payments are especially important at farms that have a challenging time coping with fluctuating milk prices. On average, MILC payments make up only about 40 percent of what farmers lose in a month based on the margin between milk and feed costs.
The payments arent huge, but for some farms its probably food on the table for a couple of weeks, he said. In the spring, it can be a considerable chunk of change when its crunch time and were trying to put crops in the ground. But wed rather have the market price of milk higher so we dont need the supplemental money.