The Milk Loss Program (MLP) will provide payments to eligible dairies for milk that was discarded without compensation from the commercial milk market due to extreme weather, e. g. droughts, wildfires, floods, hurricanes, winter storms, and more. Other qualifying events include impassable roads and power outages, and for 2022 only, tornadoes.
What compensation dairies would be eligible to claim depends on several factors:
- the average milk produced per cow in the month prior to the month when milk was removed;
- the number of milking cows in the claim period;
- the number of days when milk was removed during the claim period,
- and the ‘per hundredweight’ ($/cwt) pay price.
Dairies can claim from the first day milk was removed through to the day the farm began to market its milk as normal again. If milk had to be dumped again due to the same weather event afterwards, another claim can be made. One application per qualifying month must be made, and payments are limited to 30 days per year for each of the three years, i. e. up to 90 days across all three years.
The final payment is determined by factoring the MLP payment calculation by the relevant MLP payment percentage. The payment percentage is 90% for underserved producers, including socially disadvantaged, beginning, limited resource, and veteran farmers and ranchers and 75% for all other producers. Adjusted gross income (AGI) limitations do not apply, but average adjusted gross farm income – income derived from farming – is considered. The USDA explains that ‘a person or legal entity, other than a joint venture or general partnership, cannot receive, directly or indirectly, more than $125,000 in payments under MLP if their average adjusted gross farm income is less than 75% of their average AGI or more than $250,000 if their adjusted gross farm income is at least 75% of their average AGI’.
The calculation for determining MLP payment
((Base period per cow average daily milk production x the number of milking cows in a claim period x the number of days milk was removed or dumped in a claim period) ÷ 100) x pay price per hundredweight (cwt.).
Dairies can sign up for milk loss assistance through Monday, October 16, 2023. To do so, farmers must submit: a FSA-376 (Milk Loss Program Application) form; milk marketing statement from the month prior to the month milk was removed or dumped and for the affected month; detailed written statement of milk removal circumstances, including the weather event type and geographic scope, what transportation limitations occurred and any information on what was done with the removed milk; and any other required information.
For those applying with FSA for the first time, the following must be submitted within 60 days of the application deadline: Form AD-2047, Customer Data Worksheet; Form CCC-902, Farm Operating Plan for an individual or legal entity; Form CCC-901, Member Information for Legal Entities (if applicable); Form FSA-510, Request for an Exception to the $125,000 Payment Limitation for Certain Programs (if applicable); Form CCC-860, Socially Disadvantaged, Limited Resource, Beginning and Veteran Farmer or Rancher Certification, (if applicable); HELC and wetland conservation certification for the MLP producer and applicable affiliates.
Most producers who have applied with the Farm Service Agency before would have these form on file, but those who do not or wish to confirm their eligibility for the program should contact their local FSA county office - find which one is closest to you via this online search tool.
Other safety-net support
In other news, USDA announced that Dairy Margin Coverage (DMC) program payments have triggered every month, January through July, for producers who obtained coverage for the 2023 program year. July 2023’s income over feed margin of $3.52 per hundredweight is the lowest margin since DMC payments started in 2019.
To date, the USDA Farm Service Agency has paid more than $1bn to covered dairy producers for the 2023 program year.
