Module 3 - Calculating DDAP-III Benefits

Dairy Disaster Assistance Payment Program

DDAP-III

Module 3 - Calculating DDAP-III Benefits

Estimated Base Year Production

Determined based on NASS data:

For milk production per cow

In the State in where disaster county is located

During the applicable base period.

Module 3 - Calculating DDAP-III Benefits

Calculating Base Year Production

Base year production is calculated by taking:

average number of cows in the operation’s herd during the applicable base period

Multiplied by (X)

Applicable NASS State average

Module 3 - Calculating DDAP-III Benefits

Determination of Losses

Losses are determined according to the following:

Actual marketed production(-) Minus

Estimated base year production(=) Equals Loss

Module 3 - Calculating DDAP-III Benefits

Loss Adjustments

COC may make adjustments to production losses to the extent the reduction in production is:

Not certified by producer to be disaster-related

Determined by FSA to not be disaster-related

Module 3 - Calculating DDAP-III Benefits

Loss Adjustment Calculation

Production adjustments are calculated by:

Determining number of ineligible cows per month(x) Multiplied by

Milk produced per cow according to NASS data(=) Equals production adjustment

If NASS data for State is unavailable, the annual State average will be divided by 12 for a monthly value

Module 3 - Calculating DDAP-III Benefits

Loss Adjustment for Dairy’s No Longer in Business

Dairies that do not resume operation during the applicable claim period are only eligible for benefits through the end of the last month the operation commercially marketed milk.

Production for the average number of cows for ineligible months must be:

Adjusted from the estimated base production to not calculate as a loss

Recorded on FSA-747, Part D, Item 8

Module 3 - Calculating DDAP-III Benefits

Example of Adjustment for Dairies No Longer in Business

ABC Dairy operation went out of business in Sep 05 after the hurricane. The operation maintained an average of 100 cows during 2005.

An entry of 100 should be made in Part D item 8 for the months of Oct thru Dec to account for the production from those cows that will be subtracted from the calculated loss.

100 100 100

Module 3 - Calculating DDAP-III Benefits

Payment Rates

Payment rates for production losses are based on the average mailbox milk price according to the applicable State Marketing Orders where the eligible disaster county is located, during the eligible period.

Payment rates for unregulated States have been determined based on a contiguous or nearby State’s mailbox price

Module 3 - Calculating DDAP-III Benefits

Calculating PaymentCalculated by taking:

The applicable payment rate(x) Multiplied by

Dairy operations total eligible loss(=) Equals Loss quantity

(-) minus

Production adjustments

Amounts received for the same loss from other DDAP programs for the same period

Module 3 - Calculating DDAP-III Benefits

Determining Payment Method

If at the conclusion of signup the total value of eligible losses:

does NOT exceed the available funding, less any reserve payments will be issued at the maximum payment rate.

exceeds the available funding at the maximum payment rates, payments will be made according to an alternative payment method.

Module 3 - Calculating DDAP-III Benefits

Alternative Payment MethodDDAP-III benefits will be based on a 20% loss threshold of the total estimated base period production for each applicable claim period.

LOSS LEVEL PAYMENT RATE

Greater than 20% Maximum established payment rate

Equal to or less than 20% Eligible losses equal to or less than 20% divided by remaining funds after paying losses above 20%

Module 3 - Calculating DDAP-III Benefits

Loss Threshold Example

620,000 (total est. base period production)-485,000 (actual marketed production) 135,000 (total eligible loss)

620,000 x 20% = 124,000

135,000 -124,000 = 11,000

Calculation results in losses equal to or less

than 20% paid at a factored rate

Calculation results in losses above 20% paid at maximum

payment rate

Module 3 - Calculating DDAP-III Benefits

95 Percent Cap Total assistance may not exceed 95% of what the

value of the production would have been in the absence of a loss.

Total assistance includes:Example

DDAP-III payment $19,488

+ + Value of production not lost $277,600

$297,088

Module 3 - Calculating DDAP-III Benefits

95 Percent Cap Calculation

95% cap is calculated by multiplying:Example

Operation’s cows, times 100 cows

Annual NASS for State, times 21,404/cow (CA)

Mailbox price, times $0.1388 (CA/05)

95 percent $282,233

Module 3 - Calculating DDAP-III Benefits

Applying the 95% Cap

Example Total calculated assistance $297,088(DDAP-III payment + Production)

95% Cap $282,233 Amount above cap $14,855

Module 3 - Calculating DDAP-III Benefits

Net Payment After 95% Cap

Example

DDAP-III Payment $19,488 Exceeds cap - 14,855

Net Payment Due $4,633

Module 3 - Calculating DDAP-III Benefits

Payment ProvisionsAPPLICABLE:

Offset

Assignment

Withholding

PPI

Direct deposit

NOT APPLICABLE:

Gross revenue

Production limit

Advance payment