October 16, 2002
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Phone:(703) 243-6111
email:CGalen@nmpf.org
In a letter sent October 15th to Agriculture Secretary Ann Veneman, NMPF asked the USDA to use a formula for the new Milk Income Loss Contract (MILC) program that gives producers the average monthly payment during the months between December 2001 and August 2002. The result of such an approach would be payments of $1.08 per hundredweight, up to the 2.4 million pound annual cap established by the program.
NMPF provided Secretary Veneman's office yesterday with a legal analysis demonstrating that the USDA has the discretion to use the average monthly payment rate for the 2002 Farm Bill's the 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.
Kozak was referring to the fact that under the USDA's current approach to implementing the MILC program, mid-sized producers are not being given the option of choosing which month during Fiscal Year 2002 they wish to begin receiving payments. All producers 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.
USDA's rules for the MILC program do provide a loophole for the largest of producers, who had the option of electing to be paid $1.45/hundredweight on their September 2002 milk output. Smaller producers whose production last fiscal year fell below the 2.4 million pound ceiling are not adversely affected by the USDA restrictions.
"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.
The National Milk Producers Federation, headquartered in Arlington, VA, develops and carries out policies that advance the well-being of U.S. dairy producers and the cooperatives they collectively own. The members of NMPF's 30 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of 60,000 dairy producers on Capitol Hill and with government agencies.
For more on NMPF's activities, visit our Website at www.nmpf.org.
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