Milk prices expected to recover somewhat next year, so start MILC payments in October to take advantage of low milk prices — high MILC payments.

Despite the fact that producers have yet to receive their first check from the Milk Income Loss Contract program, it’s time to start thinking about next year’s payments.

The next phase of the MILC program starts when the government’s 2002/2003 fiscal year begins October 1. That means producers have until September 30 to decide what month they want payments to start in for this next fiscal year. Failure to select a month means payments will start in October and run until the 2.4 million pound cap is reached. But according to Bob Cropp, University of Wisconsin extension dairy economist, that’s not all bad.

Cropp predicts that milk prices have pretty much bottomed out for the year. In addition, Cropp asked producers attending a farm management seminar sponsored by the Northeast Wisconsin UW Extension district, what the odds were that milk prices would be lower next year? The answer, says Cropp is “Not too good.”

Cropp believes milk prices will soon start creeping back up. And in order to maximize your payment in the MILC program for 2002/2003 you want to start payments in the months with the lowest cash milk price — chances are that could be October.

It doesn’t matter if producers milk 50 cows or 10,000 cows, given the current market conditions starting in October just makes sense, stresses Cropp. The September MILC payment was $1.45 and current estimates for October say it will be larger. However, he predicts the January MILC payment will be around $1.12 and that by September 2003 the payment level could fall to just 31 cents per hundredweight due to improvements in the cash market.

The MILC program runs through Sept. 30, 2005.

TheCountryToday.com