Dairy Programs
Two major Federal dairy programs continue, with a new dairy market
loss program added.
- Milk price support program consisting of
- a support purchases program,
- the Dairy Export Incentive Program, and
- dairy market loss payments,
- Federal milk marketing orders
Under the 2002 Farm Act, the milk support purchase program, which
had been operating year-to-year recently, again becomes a multi-year
program. The milk support price equals $9.90 per cwt. The Commodity
Credit Corporation (CCC) will buy, at support purchase prices, any
butter, cheddar cheese, or nonfat dry milk that is offered to it
and meets specifications. The support purchase prices are set to
ensure that the price of manufacturing milk averages at least the
milk support price of $9.90 per cwt. The Secretary has authority
to adjust the product purchase price if deemed necessary.
The Dairy Export Incentive Program (DEIP) pays cash bonuses that
allow dairy product exporters to buy U.S. products and sell them
abroad when international prices are below domestic prices. DEIP
removes products from the domestic market, helps develop export
markets, and plays an important role in milk price support. The
DEIP quantities and dollar amounts are subject to World Trade Organization
restrictions under the Uruguay Round Agreement on Agriculture.
The 2002 Farm Act establishes a national milk income loss contract
(MILC) program to provide income stabilization for dairy
producers. A monthly
direct payment is to be made to dairy farm operators if the monthly
Class I price in Boston (Federal Order 1) is less than $16.94 per
cwt. Payments are to be made on up to 2.4 million pounds of milk
per year per organization (based on 2001 U.S. average data, which
is the production from about 132 cows). The number of producers
per operation does not affect its limit. Under the 2002 Act, the
program ended on September 30, 2005. The Agricultural Reconciliation
Act of 2005 extended authority for the MILC program with a reduced
payment factor through August 2007 of 34 percent of the difference
between $16.94 and the Boston Class I price.
Federal milk marketing orders are intended to help establish and
maintain orderly marketing conditions for both milk producers and
dairy product consumers. A classified pricing system and pooling
are the two key elements of milk marketing orders. Milk marketing
orders define the relationship between prices of fluid and manufactured
dairy products and a geographic price structure, sometimes called
the price surface. The 1996 Farm Act called for several changes
in the milk marketing order system, including consolidation of the
then existing 31 orders. There are currently 10 Federal milk marketing
orders.
For More Information and Specific Program Details...
|
