For Immediate Release
March 22, 1999
Contact: Kenneth M. Becker
Compact Commission Distributes CCC Reserve Fund Balance to Farmers
The Northeast Dairy Compact Commission on Monday distributed $413,000 to dairy farmers that reduced milk production in 1998. "Once again the Northeast Dairy Compact proves its benefits to farmers and consumers," commented Chairman Mae Schmidle. The Compact Commission withheld these funds in escrow last summer for payments to the USDA Commodities Credit Corporation (CCC). The Commission is required to reimburse the federal government for the cost of CCC purchases of any such surplus production during the federal fiscal year that might occur should the New England regional rate of increased production exceed the national rate.
The Commission began escrowing payments in a reserve account during the spring of 1998 to be prepared for a potential liability to the CCC. New Englandís milk production in Federal Fiscal Year 1998 (October 1997 through September 1998) increased 1.8% over the average of production during the two previous Fiscal Years 1996 and 1997. National milk production increased 1.4% during the comparable period. As a result of New Englandís faster rate of milk production increase, the Commission paid the CCC $1,762,000 in September 1998, leaving a balance of approximately $400,000 in the reserve fund.
After making the CCC payment, the Commission concluded that the balance of the account should be refunded to farmers who could document that their milk production from October 1, 1997 through September 30, 1998 was equal to or less than their production from October 1, 1996 through September 30, 1997. A total of 947 farmers from the six New England states plus New York applied for these refunds. Of those, 744 farmers were determined eligible for payments.
"The Compact Commission had to pay $1.76 million to the federal government due to increases in milk production in New England. This refund rewards those farmers who did not contribute to the regional increase in milk production that caused the liability to the CCC in the first place," said Commission Executive Director, Ken Becker.
The Commission calculated the amount of refund provided to each eligible producer by taking into account the total money retained in the reserve account and dividing that amount by the total production of milk by all eligible producers during the period from October 1997 through September 1998. The resulting value came to 3.86Ę per hundredweight.