MILC Payments

MILC Payment Rates and Projections: May 2012

MILC payment estimates going forward are lower this month compared to last month. While milk price estimates have moved lower, feed cost estimates are lower still, resulting in reduced impact of the feed cost adjuster.

 

Year Boston Class I Payment
Actual Target Rate
       
FY 2012      
October '11
 22.81 20.64 0.0000
November
 21.70
 20.66 0.0000
December 21.72 20.67 0.0000
January '12 22.05 20.78 0.0000
February 20.28 21.15 0.3895
March 19.55 21.39 0.8262
April 18.91 21.43 1.1322
May 19.10 20.61 0.6781
June 18.60 20.38 0.8019
July 18.21 19.64 0.6438
August 18.14 19.40 0.5692
September 18.40 16.94 0.0000
       

Projected from futures as of 5/11/12

 

 

What is the Milk Income Loss Contract (MILC) Program?

Payments under the MILC program are triggered when the Class I price in Boston falls below $16.94 per cwt. The base payment rate is any positive difference between $16.94 and the Class I milk price at Boston times 45%.

There is also a “feed cost adjustor,” which can only increase the payment. When the price of a hundredweight of dairy feed rises, say, 10% above its target of $7.35/cwt., the $16.94 target for Boston’s Class I price is adjusted up by 10% x 45% = 4.5%. (This 45% is feed’s rough share of milk costs.)

Payments under the program are limited by production. Producers are eligible to receive payments on up to 2.985 million pounds per fiscal year. Dairy farmers producing more than that amount annually can choose the month in which they want to start receiving payments; after that, they receive payments for all months until they reach their cap. Months with no MILC payment don’t count against their milk production cap.