Secretary of Agriculture Tom Vilsack on Dec. 17 announced the implementation of the new Dairy Economic Loss Assistance Payment (DELAP) program. The program was authorized under the 2010 agricultural appropriations act and will issue nearly $290 million in economic loss assistance payments to eligible dairy producers. The program was the latest in a series of steps taken by the federal government to assist the financially strapped dairy farm sector.

“Through this program, eligible dairy producers will receive economic assistance that will help stabilize their operations during these tough economic times,” Secretary Vilsack said. “I have personally heard from hundreds of struggling dairy farmers from all across the country who have been hit hard by declining prices over the past year, and now, we’ll be able to offer them help.”

Secretary Vilsack pointed out milk prices declined sharply through early-to-mid-2009, with the national price of milk averaging $12.23 per cwt during the first quarter of 2009 compared with $16.80 per cwt in the fourth quarter of 2008, a 27% decline. On average, the price dairy producers received for their milk marketed in the summer of 2009 was about half of what it cost them to produce milk, according to the U.S. Department of Agriculture.

Eligible producers will receive a one-time payment based on the amount of milk both produced and commercially marketed through their operation during the months of February through June 2009. Production information from these months will be used to estimate a full year’s production for an operation to calculate the payments, using a 6-million-lb per dairy operation limit.

A national per-hundredweight payment rate will be determined by dividing the available funding of $290 million, less a reserve established by the U.S.D.A., divided by the total pounds of eligible milk production approved for payment. Based on current information, the U.S.D.A. estimates 875 million cwts of milk production will be eligible for payments. The expected payment rate would be approximately 32c per cwt.

Any dairy producer who has an annual average adjusted nonfarm income of more than $500,000 for calendar years 2006 through 2008 is not eligible for DELAP.

“This is an essential stopgap measure that will help many dairy farmers stay in business for the short term,” said Representative Collin C. Peterson of Minnesota, chairman of the House Committee on Agriculture. “Looking forward, it is obvious that our existing dairy programs are not providing an adequate safety net for dairy farmers, and we need to look at ways we can reform dairy policy to ensure that it provides adequate support for the long-term success of the industry.”