FOR IMMEDIATE RELEASE

December 24, 2008

CONTACT:

Paul Lehman, Public Affairs Officer

530-792-5520

(DAVIS, CA) Dec. 24, 2008 - John Smythe, Executive Director of USDA's Farm Service Agency (FSA) in California encourages dairy producers to note that signup for the Milk Income Loss Contract Program (MILC) began on December 22, 2008 and will continue through the program's expiration date, Sept. 30, 2012.

Smythe suggests that producers should carefully evaluate this program for their own operations and be aware that the month they select for start-up will be an important factor. The 2008 Farm Bill reauthorizes the MILC Program, in which FSA makes MILC payments to dairy producers when the Boston Class I milk price falls below the Target Price of $16.94 per hundredweight (cwt), modified by the feed cost adjuster.

There are three key changes in MILC program operation. A "feed cost adjuster," is introduced, which adjusts the $16.94 per hundredweight (cwt.) benchmark price upward depending on the cost of feed rations. Under the Farm Bill, the MILC payment rate and the per-operation poundage limit are modified, depending on when the milk is produced.

According to Smythe, USDA's Commodity Credit Corporation (CCC) issues MILC payments on an operation-by-operation basis up to a maximum of 2.4 million pounds of milk produced and marketed (about 120 cows) from Oct. 1, 2007, through Sept. 30, 2008. The production limit per operation increases to 2.985 million pounds (about 145 cows) for each fiscal year from Oct. 1, 2008, through Aug. 31, 2012. After that, the production limitation reverts back to the original limit of 2.4 million pounds per fiscal year.

The 2008 Farm Bill's MILC feed cost adjustment takes effect when the monthly National Average Dairy Feed Ration Cost (calculated from the "entire month" prices published by the National Agricultural Statistics Service) is greater than $7.35 per cwt. This modification raises the target price of $16.94 cwt., providing an adjustment for higher feed prices that may affect producers.

Beginning with Fiscal Year 2009 marketings, which started Oct. 1, 2008, the Farm Bill made changes to the provisions for payment eligibility to add an adjusted gross income (AGI) limit. If the individual or entity has annual non-farm AGI for the relevant base period greater than $500,000, the individual or entity is not eligible for MILC benefits. The base period will be set pursuant to AGI regulations yet to be issued. That rule will also define what is considered to be non-farm income.

During the signup application period, participating dairy operations must select the month of the fiscal year to start receiving payments for eligible production. Eligible dairy producers are those who commercially produce milk in the United States. To receive program approval, producers must enter into a MILC contract with CCC and provide monthly milk marketing data. Dairy producers can apply for MILC at local FSA offices.

All payments in the program are subject to limits in the contract, regulations, and to changes in statutory provisions for payment. For more information on MILC, visit your nearest FSA office or Service Center. To find your nearest office, visit www.fsa.usda.gov/ca .