FACT SHEET

UNITED STATES DEPARTMENT OF AGRICULTURE

FARM SERVICE AGENCY

Page 1

April 2011

Milk Income Loss Contract (MILC) Program

Overview

USDA’s Milk Income Loss 

Contract Program (MILC), 

administered by the Farm 

Service Agency’s (FSA), 

compensates dairy producers 

when domestic milk prices fall 

below a specified level. The 

2008 Farm Bill authorized 

MILC through Sept. 30, 

2012. The program has no set 

funding level.

Eligible Dairy Producers

Eligible dairy producers are 

those who, beginning Oct. 1, 

2007, through Sept. 30, 2012:

• Commercially produce and 

market cow milk in the 

United States; or

• Produce milk in the 

United States and 

commercially market the 

milk outside the United 

States.

Dairy producers must be 

in compliance with Highly 

Erodible Land and Wetland 

conservation provisions. 

Dairy producers are subject 

to the Adjusted Gross Income 

(AGI) limitation. If non-farm 

income exceeds $500,000 the 

dairy operation and the dairy 

producer are not eligible for 

MILC benefits. 

Sign-up

Sign-up for the program began 

Dec. 22, 2008, and extends 

through the conclusion of the 

program on Sept. 30, 2012.

Eligible dairy producers can 

apply for program benefits 

anytime during sign-up. 

Payments

FSA makes MILC payments 

on a monthly basis when 

the Boston Class I milk 

price falls below $16.94 

per hundredweight (cwt) as 

adjusted by the dairy feed 

ration adjustment. The 

monthly Boston price is posted 

online at: http://www.fmmone.

com/Northeast_Order_Prices/

NE_Prices_main_new.htm.

When the Boston milk price 

exceeds $16.94 as adjusted 

by the dairy feed ration 

adjustment:

• FSA will make no MILC 

payments to the dairy 

operation; and

• Production for that month 

will not count towards 

the operation’s maximum 

eligible production.

Payment Rate Calculation

FSA determines the per 

hundredweight payment rate 

for the applicable month by 

subtracting the Boston Class 

I price for that month from 

the $16.94 baseline price, and 

multiplying the difference by:

• 45 percent during the 

period Oct. 1, 2008, 

through Aug. 31, 2012; or

• 34 percent during the 

period Oct. 1, 2007, 

through Sept. 30, 2008, 

and during Sept. 2012. 

Feed-Cost-Adjusted Payment 

Rate Adjustment

The baseline price of $16.94/

cwt is adjusted upward when 

the National Average Dairy 

Feed Ration Adjustment 

(NADFR) is greater than the 

following established levels:

Jan. 1, 2008 - 

Aug. 31, 2012 $7.35

Sept. 1 - 30, 2012 $9.50

The NADFR is calculated 

each month from the price of 

feed ingredients used to create 

a 16 percent protein dairy 

feed. The feed ingredient 

prices used to calculate the 

NADFR are posted monthly 

by the National Agricultureal 

Statistics Service (NASS) 

and can be obtained at the 

following website: http://usda.

mannlib.cornell.edu/usda/

current/AgriPric/

If the triggering feed ration 

amount is exceeded, the 

benchmark $16.94 figure for 

the MILC payment calculation 

will be increased by the 

percentage amount, which is 

45 percent (or 34 percent for 

certain periods as indicated 

above) of the percentage 

amount by which the feed 

ration cost exceeded its own 

benchmark for the period Oct.
FACT SHEET

Milk Income Loss Contract (MILC) Program April 2011

1, 2008 through Aug. 31, 2012.

Example:

When the NADFR exceeds 

these established levels the 

trigger price is calculated as 

illustrated in the following 

example. This hypothetical 

example assumes the NADFR 

is $10.05/cwt for a month 

falling from Oct. 1, 2008 

through Aug. 31, 2012.

$10.05 (NADFR) - $7.35 = 

$2.70

$2.70/$7.35 = .3673

.3673 x 45% = .1653

.1653 x $16.94 = $2.80

$16.94 + $2.80 = $19.74

If the Boston Class I price is 

$18.00/cwt, the payment rate 

will be calculated as follows:

$19.74 - $18.00 = $1.74/cwt

$1.74/cwt x 45% = $.7830/cwt

FSA issues payments not 

later than 60 calendar days 

after FSA receives production 

evidence for the applicable 

month or the entire month’s 

NADFR is posted for the 

applicable month, whichever 

is later. 

Eligible Pounds of 

Production

FSA issues payments up to the 

maximum eligible pounds of 

milk produced and marketed 

by each operation per fiscal 

year.

The annual maximum eligible 

pound limit per dairy operation 

per fiscal year is as follows:

Oct 1, 2007- Sept. 30, 2008 – 

2,400,000 lbs

Oct 1, 2008- Aug. 31, 2012 – 

2,985,000 lbs

(Except that for fiscal year 

2012, the fiscal year cap to 

qualify Sept. 2012 production 

only will be reduced to 2.4 

million pounds). 

Payment Rates

FSA posts monthly MILC 

payment rates online at: http://

www.fsa.usda.gov/FSA/weba

pp?area=home&subject=prsu

&topic=mpp-mi. There are no 

payment rates effective for the 

2008 fiscal year. 

Production Start-month 

Selection

MILC participants must select 

a month of commercially 

marketed production for which 

FSA will begin issuing the 

operation’s payments for each 

fiscal year.

Starting with the dairy 

operation’s selected month, 

FSA will issue MILC 

payments based on the 

month’s production and 

each consecutive month’s 

production thereafter at the 

payment rate applicable to 

each month with a rate in 

effect, until the earlier of the 

following:

• The operation reaches 

the maximum payment 

quantity; or

• The applicable fiscal year 

ends.

Production Start-month 

Selection Rules

The dairy operation’s selected 

production start-month must 

be designated on Form CCC580, “Milk Income Loss 

Contract Program (MILC),” 

and submitted to the FSA 

county office:

• On or before the 14th day 

of the month before the 

selected MILC production 

start-month, except as 

otherwise provided during 

the applicable sign-up 

phase; and

• Before the selected 

month’s Boston Class I 

fluid price is announced to 

the public; or

• The dairy operation has the 

option to select the month 

in which the contract 

application is submitted as 

a production start month.

A dairy operation cannot select 

a MILC production startmonth for any month that:

• Has already begun, except 

as otherwise provided;

• Has already ended; or

• Milk was not produced by 

the dairy operation.

Exception: If the contract is 

submitted within 30 days of 

the time at which CCC begins 

accepting contracts, the dairy 

operation can select any 

month preceding the month 

the contract is submitted 

or any month thereafter in 

accordance with the “Selecting 

and Changing Production 

Start-month” paragraph below, 

as the 2009 production start 

month, including the month Page 2
FACT SHEET

Milk Income Loss Contract (MILC) Program April 2011

the contract is submitted. 

Selecting and Changing 

Production Start-months

Dairy operations can change 

the start-month an unlimited 

number of times as long as the 

change is made:

• On or before the 14th 

day of the month prior 

to the MILC production 

start-month (unless that 

day falls on a weekend, 

then the date falls to the 

previous business day);

• Before payment is sought; 

and

• Before the original 

selected MILC production 

start-month has passed.

If the dairy operation never 

changes the selected startmonth, the start-month will 

remain the same throughout 

the MILC contract’s duration.

How to Apply

To apply for MILC, dairy 

operations must submit Form 

CCC-580, “Milk Income Loss 

Contract Program (MILC),” to 

the FSA county office where 

the operation is located. The 

form is available at FSA 

county offices and online at: 

http://

forms.sc.egov.usda.gov/

eforms/mainservlet

The production start-month 

for each fiscal year must be 

designated on the Form CCC580. As milk is marketed, the 

operation must report the total 

pounds of all milk produced 

and marketed during each 

month for all persons receiving 

a share of the marketed milk. 

Monthly milk production 

cannot be apportioned to 

circumvent the maximum 

payment quantity. All persons 

sharing in the risk of a dairy 

operation’s total production 

must certify the information on 

the CCC-580. FSA will accept 

only one Form CCC-580 per 

dairy operation.

When applying for MILC 

benefits, operators must also 

have on file:

• Form AD-1026, 

“Highly Erodible Land 

Conservation and 

Wetland Conservation 

Certification,” used to 

certify understanding 

of USDA conservation 

compliance requirements;

• Form SF-1199A, “Direct 

Deposit Sign Up Form,” 

used to sign up for the 

direct deposit of payments 

into the payee’s account;

• Form CCC-526 or CCC926, Adjusted Gross 

Income (AGI) Statement; 

and

• Form CCC-901, 

“Members Information,” 

or Forms CCC-902E/CCC902P, “Farm Operating 

Plan,” or Form CCC-580S, 

“MILC Supplemental,” 

used to determine payment 

eligibility. 

Dairy operations can obtain 

these forms at FSA county 

offices and online at: http://

forms.sc.egov.usda.gov/

eforms/mainservlet

Production Evidence

Before FSA can issue MILC 

payments, all persons involved 

in a single dairy operation 

must provide verifiable 

production evidence, which 

can include:

• Milk marketing payment 

stubs;

• Tank records;

• Milk handler records;

• Daily milk marketings; or

• Copies of any payments 

received as compensation 

from other sources.

FSA county offices have 60 

calendar days after receiving 

the production evidence and all 

supporting documents for the 

applicable month or the entire 

month NADFR cost is made 

available by USDA to issue 

payments to dairy operations.

Ineligible Milk Production

The following is not 

considered commercially 

marketed milk and 

is ineligible as MILC 

production:

• Dumped milk that causes 

bulk load contamination 

for which a producer 

receives an insurance 

indemnity; and

• Milk dumped on a farm by 

order of a state or health 

department.

Reconstitutions

Dairy operators must 

immediately notify FSA of 

any changes affecting an 

operation’s MILC contract. If 

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FACT SHEET

Milk Income Loss Contract (MILC) Program April 2011

a reconstitution occurs during 

the contract period, MILC 

contract changes will take 

effect the first day of the fiscal 

year following the month FSA 

receives notification of the 

changes. However, changes 

resulting in the reduction of 

shareholders or producers will 

take effect immediately upon 

notification to FSA.

Dairy operators cannot 

reorganize a dairy operation’s 

structure for the sole purpose 

of receiving multiple 

payments.

Eligible pounds of production 

that received MILC payments

will be applied to the pounds 

of production eligible for 

payment for reconstituted 

dairy operations.

MILC Agents

MILC benefits may be 

disbursed by a dairy marketing 

cooperative serving special 

groups or communities, 

such as Amish or Mennonite 

communities. Such producers 

may authorize a cooperative 

agent or milk handler affiliated 

with a dairy marketing 

cooperative to obtain and 

disburse MILC benefits to the 

operation. FSA must approve 

qualified agents.

Dairy operations must grant 

MILC agents power of 

attorney authority to act on 

their behalf by submitting 

Form CCC-582 “MILC Agent 

Application Agreement” 

to FSA for approval. The 

operator must also complete 

Form FSA-211, “Power of 

Attorney,” and submit the 

form to the FSA office where 

the dairy operation is located. 

The form is available at FSA 

county offices and online at: 

http://forms.sc.egov.usda.gov/

eforms/mainservlet

For More Information

Dairy operations can obtain 

more information on MILC at 

FSA county offices and online 

at: http://www.fsa.usda.gov; 

click on Price Support.

The U.S. Department of Agriculture 

(USDA) prohibits discrimination 

in all of its programs and activities 

on the basis of race, color, national 

origin, age, disability, and where 

applicable, sex, marital status, 

familial status, parental status, 

religion, sexual orientation, political 

beliefs, genetic information, 

reprisal, or because all of part of an 

individual’s income is derived from 

any public assistance program. (Not 

all bases apply to all programs.) 

Persons with disabilities who require 

alternative means for communication 

of program information (Braille, 

large print, audiotape, etc.) should 

contact USDA’s TARGET Center at 

(202) 720-2600 (voice and TDD). 

To file a complaint of discrimination, 

write to USDA, Assistant Secretary 

for Civil Rights, Office of the 

Assistant Secretary for Civil Rights, 

1400 Independence Avenue, S.W., 

Stop 9410, Washington, DC 20250-

9410, or call toll-free at (866) 632-

9992 (English) or (800) 877-8339 

(TDD) or (866) 377-8642 (English 

Federal-relay) or (800) 845-6136 

(Spanish Federal-relay). USDA is 

an equal opportunity provider and 

employer.

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