UNIVERSITY PARK, Pa. -- Should they or shouldn't they? Some Pennsylvania dairy farmers, trying to stay solvent during the current spate of record low milk prices, are wrestling with the pros and cons of a special assistance program sponsored by the U.S. Department of Agriculture (USDA), according to a dairy economist in Penn State's College of Agricultural Sciences.

"Pennsylvania's dairy farmers are eligible for government payments under the Dairy Market Loss Assistance (DMLA) II program recently announced by the USDA," says Bob Parsons, senior research assistant in agricultural economics and rural sociology. "The program provides cash payments to help farmers weather the recent drastic drop in milk prices, while government milk market support is being phased out." But some farmers are unsure about this temporary effort, Parsons explains.

"Dairy farmers can participate in the program or stay on the sidelines," he says. "Some are concerned that participation will obligate them in some way, or will not be worth the trouble. But any income assistance can help during the current period of depressed prices, which is expected to last until May or June.

"Unfortunately, this program alone will not save financially distressed farmers," says Parsons. "They will have to control their costs by monitoring every expense. But this assistance can be one component that will help farmers hang on until milk prices rebound."

The DMLA II program is an extension of the 1999 DMLA I program in which participating dairy farmers received approximately 22 cents per hundredweight (or 100 pounds of milk) to an upper limit of 2.6 million pounds per farm in 1998. But, Parsons explains, this year's rules and the final payment level are somewhat different.

"First," Parsons says, "if you enrolled last year by meeting the requirements of producing milk during 1998, presenting your marketing receipts at your local Farm Service Agency (FSA) office, and receiving a payment, you are enrolled automatically in the 2000 program.

"Second, if you started dairy production in 1999, you are eligible for this round based on your 1999 production. If you took over an established dairy farm that was in operation during 1998, you will be eligible for the program based on the farm's historic production.

"Third, dairy farmers who did not participate in the 1999 program are eligible for a late sign-up for the 1999 program and also can participate in the 2000 program," he adds. "So, you can sign up and receive a delayed payment for milk produced in 1998. This also will enter you automatically for a payment for milk produced in 1999. To receive the payment, you must present your 1998 milk marketing receipts at your local FSA office."

The final 2000 payment level will be determined after the sign-up period, with payments going first to producers who were eligible but did not participate in the 1999 program. Then, the payments will be calculated and sent to farmers eligible for the 2000 program.

Under last year's program, the typical Pennsylvania farmer -- with 65 cows producing 17,000 pounds of milk per cow -- received $2,319, with a maximum payment of $5700 per farm. Parsons says this year's payment may be less and will depend on the final sign up. Farmers should contact their local FSA office for eligibility deadlines and more information.

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EDITORS: For more information, contact Bob Parsons at 814-863-8645.

Contacts: Gary Abdullah gxa2@psu.edu 814-863-2708 814-865-1068 fax