# Presentation: 703848

## Dairy Disaster Assistance Payment Program

- DDAP-III

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
Welcome to Module 3.  Here we will review how losses are determined, program payment rates and how to calculate DDAP-III benefits.

## Estimated Base Year Production

- Determined based on NASS data:
- For milk production per cow
- In the State in where disaster county is located
- During the applicable base period.

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
Eligible production losses will be determined by establishing an estimated base year production for the base period.  

Estimated base year production is determined based on data obtained from NASS for milk production per cow in the State in which the eligible disaster county is geographically located during the applicable base period. 

## Calculating Base Year Production

- Base year production is calculated by taking:
- average number of cows in the operation’s herd during the applicable base period
- 			Multiplied by (X)
- Applicable NASS State average

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
The average number of cows in the dairy operation’s herd during the applicable base period is multiplied by the applicable NASS State average to determine the estimated base year production for the dairy operation.  

## Determination of Losses

- Losses are determined according to the following:
- Actual marketed production
- (-) Minus
- _Estimated base year production_
- (=) Equals Loss

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
Actual marketed production is subtracted from the estimated base year production to determine the dairy operation’s production loss eligible for payment.

Actual production that exceeds the estimated base year production means that the dairy operation incurred no eligible production losses for the corresponding claim period as a result of the natural disaster.

Note:	The calculated loss for payment cannot exceed the higher of the estimated loss of production due to the qualifying disaster claimed on FSA-747, item 7B, or the loss determined from the calculation provided in here.

## Loss Adjustments

-    COC may make adjustments to production losses to the extent the reduction in production is:
- Not certified by producer to be disaster-related
- Determined by FSA to not be disaster-related

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
Actual production losses may be adjusted by COC to the extent the reduction in production is:

not certified by the producer to be the result of the disaster identified in the natural disaster declaration
determined by FSA not to be related to the natural disaster identified in the natural disaster declaration.

## Loss Adjustment Calculation

- Production adjustments are calculated by:
- Determining number of ineligible cows per month
- (x) Multiplied by
- _Milk produced per cow according to NASS data_
- (=) Equals production adjustment
-     If NASS data for State is unavailable, the annual State average will be divided by 12 for a monthly value

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
COC must calculate production adjustments for losses unrelated to the natural disaster declaration by:

determining, on a monthly basis, the number of cows in the dairy operations’ dairy herd during the applicable month or months during the claim period determined to be ineligible to generate claims for benefits

multiplying the milk produced per cow for the month, as determined from monthly data obtained from NASS, applicable to the State, as available.

Note:	If monthly NASS data for the State in which the disaster county is located is unavailable, the annual average for the State will be divided by 12 to determine an average of milk produced on a monthly basis for that State.

## Loss Adjustment for Dairy’s No Longer in Business

- Dairies that do not resume operation during the applicable claim period are only eligible for benefits through the end of the last month the operation commercially marketed milk.
- Production for the average number of cows for ineligible months must be:
- Adjusted from the estimated base production to not calculate as a loss
- Recorded on FSA-747, Part D, Item 8

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
Dairy producers that cease dairying and do not resume dairy operations during the applicable claim period after the qualifying disaster and no longer commercially produce milk are only eligible for DDAP-III benefits through the end of the last month the dairy operation commercially produced milk.  

Months remaining in the applicable claim period that follow the last month the dairy operation was in business do not qualify as a loss and the dairy operation will not receive DDAP-III benefits for those months in which the producer has no production evidence of commercial milk marketings.  Estimated production for the average number of cows for the dairy operation during the ineligible months must be adjusted from the estimated base production to not calculate as a loss and also recorded in Part D, item 8 for the applicable year and months.

## Example of Adjustment for Dairies No Longer in Business

- 	ABC Dairy operation went out of business in Sep 05 after the hurricane.  The operation maintained an average of 100 cows during 2005.
-     An entry of 100 should be made in Part D item 8 for the months of Oct thru Dec to account for the production from those cows that will be subtracted from the calculated loss.

- 100

- 100

- 100

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
ABC Dairy operation went of business in September 2005 after a hurricane.  The operation maintained an average of 100 cows during the 2005 calendar year.  

100 cows should be entered in Part D item 8 of the FSA-747 for the months of October through December when the dairy was no longer in operation to account for the production from those cows that will be subtracted from the production losses determined for the dairy operation.

## Payment Rates

- Payment rates for production losses are based on the average mailbox milk price according to the applicable State Marketing Orders where the eligible disaster county is located, during the eligible period.
- Payment rates for unregulated States have been determined based on a contiguous or nearby State’s mailbox price

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
Payment rates for production losses are based on the annual average mailbox milk price according to applicable State Marketing Orders where the eligible disaster county is located, as reported by AMS, during the eligible period.

Payment rates for States not regulated under a Marketing Order have been determined based on a contiguous or nearby State’s mailbox price.  

Maximum payment rates for eligible losses for dairy operations located in specific States are available on the PSD website.

## Calculating Payment

- Calculated by taking:
- The applicable payment rate
- (x) Multiplied by
- _Dairy operations total eligible loss_
- (=) Equals Loss quantity
- (-) minus
- Production adjustments
- Amounts received for the same loss from other DDAP programs for the same period

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
Payment on eligible dairy operation losses will be calculated using whole pounds of milk.  

Each dairy operation’s payment is calculated by multiplying the applicable payment rate by the operation’s total eligible losses, less any: 

production adjustments
amounts received for the same loss from other dairy disaster assistance programs for the same eligible period.

Note:	Payments for amounts received from other dairy disaster assistance programs for the same loss must be indicated on FSA-747 under remarks, this includes any payments received under DDAP-II for the Gulf Region.

Payments will be disbursed according to each producer’s share of the dairy operation’s production as specified on the FSA-747.

## Determining Payment Method

- 	If at the conclusion of signup the total value of eligible losses:
_**does**__ __**NOT**__ __**exceed**_ the available funding, less any reserve payments will be issued at the maximum payment rate.
_**exceeds**_ the available funding at the maximum payment rates, payments will be made according to an alternative payment method.

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
If it is determined by FSA at the conclusion of signup that the total value of eligible losses exceeds the available funding, less any reserve, then payments will be made according to an alternative method that establishes a priority threshold for losses paid at the maximum established payment rate. 

## Alternative Payment Method

- 	DDAP-III benefits will be based on a 20% loss threshold of the total estimated base period production for each applicable claim period.

| LOSS LEVEL | PAYMENT RATE |
| --- | --- |
| Greater than 20% | Maximum established payment rate |
| Equal to or less than 20% | Eligible losses equal to or less than 20% divided by remaining funds after paying losses above 20% |

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
If the total value of losses at the conclusion of the signup period is determined by FSA to exceed the available funding, DDAP-III program benefits will be based on a 20 percent loss threshold of the total estimated base period production for each applicable claim period during the eligible period.  

When the loss threshold goes into effect, eligible dairy operations will receive a combined payment for eligible losses above 20 percent and eligible losses equal to and below 20 percent. 

## Loss Threshold Example

-  620,000 (total est. base period production)
- _-485,000_ (actual marketed production)
-  135,000 (total eligible loss)
- 620,000 x 20% = 124,000
- 135,000 -124,000 = 11,000

- Calculation results in losses equal to or less than 20% paid at a factored rate

- Calculation results in losses above 20% paid at maximum payment rate

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
Producer A in Louisiana for 2005 has a total estimated base period production of 620,000 pounds.
Producer A actually marketed 485,000 pounds in 2005.

The actual 2005 marketed production of 485,000 pounds is subtracted from the total estimated base period production of 620,000 pounds for the result of a total eligible loss of 135,000 pounds.

To determine the 20% loss threshold, the total estimated base production of 620,000 pounds is multiplied by 20 percent, for a result of 124,000,which will be paid at a rate factored by funds remaining after paying losses above 20 percent.

Losses above 20% are determined by subtracting from the total eligible loss of 135,000, the result of 20% of the base production, which in this example was 124,000.  The result is 11,000 pounds which will be paid at the maximum established payment rate.  

Producer A will receive a combined payment of the 2 calculations.   

## 95 Percent Cap		

- Total assistance may not exceed 95% of what the value of the production would have been in the absence of a loss.
- Total assistance includes:
- 							_Example_
- DDAP-III payment			$19,488
- 			+				   +
- Value of production not lost		_$277,600_
- 							$297,088

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
No DDAP-III program participant may receive benefits that in combination with the value of production not lost would result in an amount that exceeds 95% of the value of the expected production for the disaster period.

The sum of value of the production not lost, if any, and the DDAP-III payment received cannot exceed 95% of what the production’s value would have been if there had been no loss.  

The value of production not lost is determined by multiplying actual production marketed by the applicable mailbox price.

## 95 Percent Cap Calculation

- 95% cap is calculated by multiplying:
- 							_Example_
- Operation’s cows, times		100 cows
- Annual NASS for State, times	21,404/cow (CA)
- Mailbox price, times		$0.1388 (CA/05)
- 95 percent				$282,233

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
The 95% cap is calculated by multiplying the number of cows in the dairy operation, in this example 100, times the annual NASS data for the State for the applicable year, which for this example we are using 21,404 pounds per cow in California in 2005, times the mailbox price of $0.1388, times 95 percent, which results in $282,233.

## Applying the 95% Cap

- 							_Example_
- Total calculated assistance	$297,088
- (DDAP-III payment + Production)
- 95% Cap					_$282,233_
- Amount above cap			$14,855

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
To apply the 95% cap, you will take the total calculated assistance, which is comprised of the calculated DDAP-III payment and the value of production not lost, and from that subtract the 95% cap.  The result is the amount that exceeds the 95% cap.

## Net Payment After 95% Cap

- 							_Example_
- DDAP-III Payment			$19,488
- Exceeds cap				_- 14,855_
- Net Payment Due			$4,633

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
The amount that exceeds the 95% cap is then subtracted from the calculated DDAP-III payment, and the result will be the amount due to the dairy operation.  

## Payment Provisions

_**APPLICABLE:**_
- Offset
- Assignment
- Withholding
- PPI
- Direct deposit

_**NOT APPLICABLE:**_
- Gross revenue
- Production limit
- Advance payment

- Module 3 - Calculating DDAP-III Benefits

**Notes:**
Provisions applicable to DDAP-III payments include:

Administrative offset
Assignment
Withholding
Prompt payment interest, and
Direct deposit provisions requiring payments be received by electronic transfer by filing SF-1199A according to 1-FI, Part 3.

Provisions not applicable to DDAP-III benefits include:

Gross revenue
Per operation production limits, and
Advance payments will not be issued for this program.