The government’s budget sequestration that went into effect Friday could reduce the January Milk Income Loss Contract (MILC) payment, which was also announced last week.
The January MILC payment rate was announced at 11.8¢/cwt, and it could now be subject to sequestration, says Andy Novakovic, a dairy economist with Cornell University. The reduction would only be 7% to 8%, or about a penny, but it is an example of how dairy farmers could be affected.
About the only United States Department of Agriculture programs that will not be impacted are the Supplemental Nutrition Assistance Program (commonly known as food stamps) and the Conservation Reserve Program. Funds for the Women, Infants and Children feeding program are subject to sequestration. And other conservation programs such as EQIP (the Environmental Quality Incentives Program) also could have funding reduced.
Even Federal Milk Marketing Orders may be subject to sequestration, even though they are funded almost entirely by users fees paid by cooperatives and dairy processors, says Novakovic. And the dairy futures markets could be impacted because USDA could furlough folks within the department who handle mandatory price reporting and then publish monthly prices.
"USDA will be unfolding more information [on how it will handle the sequestration] as we go along," says Novakovic. In other words, stay tuned.
For more on Novakovic’s analysis of sequestration, click here.