A last-minute change in the Milk Income Loss Contract program allows producers some flexibility in choosing their retroactive transition payments. They can be paid for milk produced starting in December 2001, or they can apply it instead to milk produced this coming September, says Dann Stuart, acting chief of public affairs for the Farm Service Agency in Washington.

That is good news for large-scale producers.

According to calculations by Phil Plourd, senior market analyst with Blimling and Associates in Cottage Grove, Wis., producers who ship 1.3 million pounds or more per month should select the month of September for their transition payments. Using an estimate of $1.50 per hundredweight for the September payment, a producer who ships 1.3 million pounds of milk would receive $19,500. That same producer, who opted to start transition payments in December 2001 would only receive $18,590, owing to December and January pay rates of 77 cents and 78 cents, respectively.

Transition payments stop once a producer reaches 2.4 million pounds. To qualify for the September payment, producers must complete the necessary paperwork by Aug. 30.

You can change your selection month
Another point of clarification for producers is that when you sign up for the MILC program, you will be asked to select in which month you want your regular monthly payments to begin.

Small-scale producers will want to start this October ¾ the first month of the new marketing year ¾ in order to reach maximum payments on production up to 2.4 million pounds. But, producers who ship more than that can select months further into the marketing year, depending on which months they believe will yield the lowest cash milk price and therefore the highest program pay price.

However, as market conditions change and the year progresses, you may want to change your start date. The program allows you to do that. But, explains FSA’s Stuart, you must make the change before the beginning of the month.

For example, if you select July as your start month and want to change it to August, you have until June 30 to do so.