Dairy’s ox could get gored with an income limit of $500,000 in gross sales proposed by the Obama Administration in its new budget bill. Such a limit could severely restrict which dairy farmers will be eligible for direct payments such as the Milk Income Loss Contract (MILC) payments. (www.agweb.com/get_article.aspx).
Currently, dairy producers are eligible for the payments on annual production up to 2.985 million lb. But with the proposed income limit of $500,000, the rules of the game could change dramatically.
For example, based on a U.S. all-milk price of $18.32 in 2008 and assuming 20,000 lb./cow, $500,000 in gross sales would kick producers out with more than 135 cows. And that doesn’t count other sales, such as cull cows or crop sales. It’s possible, depending on how the accounting is done, producers with more than 100 cows would be ineligible for direct payments.
The proposal is already running into stiff opposition from Farm State Congressmen. Stay tuned.
