Market Loss Payment Expected

FARGO - May 30/02 - SNS -- A market loss payment of U.S. $1.20 per 100 pounds (cwt) is expected to be made in June under terms of the 2002 Farm Bill, reckons Dwight Aakre of the NDSU Extension Service.

The announced June Class 1 price for Boston is $14.28. The dairy market loss program pays all eligible dairy producers 45% of the difference between $16.94 and the Class 1 fluid milk price in Boston. No payment is made for any month the Boston price is above $16.94. This program is retroactive to Dec. 1, 2001.

"Once USDA has completed the rule-making process they will announce a sign-up period. All dairy producers should contact their local county FSA office after the sign-up period has been announced, to schedule an appointment for completing an application for this program," Aakre says. "Producers will be responsible for providing evidence of marketings for each month a payment will be made."

The dairy market loss program is a compromise between dairy interests in the Northeast that were advocating a continuation of the Northeast Dairy Compact and Midwest and Western dairy interests that wanted to eliminate the Compact, Aakre says.

The outcome is a national program very similar to the way the Northeast Dairy Compact was set up. The $16.94 target price is the same price used in the Compact. The 45% factor represents the approximate Class 1 utilization in the Boston market area. The Northeast Dairy Compact supported the Class 1 fluid milk price only. It had no effect on the portion of the raw milk price derived from manufactured products.