Even though Milk Income Contract Loss payments have been temporarily suspended, they should resume soon and are not subject to the latest budget-cutting moves by the U.S. Department of Agriculture.  

Earlier this week, USDA Secretary Tom Vilsack said his agency would trim payments to 350,000 farmers by about $152 million to comply with automatic spending cuts known as "sequester."  

Vilsack said the money would come out of the $5 billion-a-year direct-payment subsidy, which is paid in the fall, to offset reductions due in three USDA programs, including the Milk Income Contract Loss program and two others, that have already disbursed money to farmers. 

The Farm Service Agency (FSA) temporarily suspended disbursement of payments for many FSA programs, starting on March 1. On March 19, the USDA notified Congress of its intention to transfer money from the direct payment program to other FSA programs. There is a 30-day Congressional notification period that must pass before the agency can move forward with this transfer. Therefore, payments in the following programs will continue to be deferred for the next 30 days: 2011 Supplemental Revenue Assistance Payments Program (SURE), Noninsured Crop Disaster Assistance Program (NAP) for both 2012 and 2013 crop years, and the Milk Income Loss Contract Program (MILC). After 30 days, FSA intends to resume making these program payments in full.

Thursday morning, a USDA spokesperson issued the following statement to Dairy Herd Management:

“As the USDA implements sequestration, we are committed to carrying out these cuts in a manner that provides the least disruption to our customers. Using limited authority available in FSA programs, USDA will reduce direct payments in order to avoid requiring about 350,000 producers to refund  a portion of the payments they have already received through other programs. This action will also save American taxpayers significant administrative costs that would be required to recoup these payments. While USDA's efforts will minimize disruption to the extent possible, we cannot mitigate the negative effects that cuts of this magnitude will have on our mission. We continue to urge Congress to replace sequestration with balanced deficit reduction.”