The National Milk Producers Federation has asked the USDA to use a formula for payments that would provide the maximum benefit to all sizes of producers.

The National Milk Producers Federation (NMPF) has sent a letter to Secretary of Agriculture Ann Veneman to urge the U.S. Department of Agriculture to change the Milk Income Loss Contract program in order to provide the maximum benefit to farmers of all sizes.

In the letter sent October 15, NMPF asked the USDA to use the average of payments for the transition period of December 2001 to August 2002 for all size producers. Doing so would result in a payment of $1.08 per hundredweight of milk produced during that time — up to the 2.4 million pound cap. This payment schedule would treat producers of all size fairly. The current payment formula penalizes mid-size producers.

NMPF also provided Secretary Veneman’s office with a legal analysis demonstrating that the USDA has the discretion to use the average monthly payment rate for the 2002 Farm Bill’s new dairy payment program.

"We believe this is a reasonable request and is one that achieves a sustainable compromise position which does not disenfranchise the producers with herd sizes generally between 200 and 1000 cows. This segment is being unfairly and negatively impacted by USDA’s present instructions," NMPF President and CEO Jerry Kozak wrote in the letter to Veneman.

Under the USDA’s current approach to implementing the MILC program, mid-sized producers have not been given the option to chose which month during Fiscal Year 2002 they wish to begin receiving payments. All producers — except the very largest who produce 2.4 million pounds in one month — must start with last December, until they cap out at 2.4 million pounds of production. Unfortunately, payment rates from December through February average only $0.78 per hundredweight, significantly below the average payment rate for the entire Fiscal Year. And the option given to large producers allowed them to take their payment in the month of September for which the payment rate was $1.45 per hundredweight.

"We are concerned that the Department is pursuing a policy with respect to the transition period payment that will not help the ‘broad range’ of dairy farmers, but, instead, will target mid-sized dairy farmers for exclusion," the NMPF letter wrote. "I strongly encourage you to reconsider your present instructions to Farm Services Agency offices, and make a decision that treats all producers fairly. The use of an average price in calculating the transition period payment would not violate USDA’s contention of ‘gaming’ the system and would work to resolve much of the current producer disillusionment with USDA’s implementation of the program," Kozak wrote.

National Milk Producers Federation