Dairy Indemnity Payment Program (DIPP)

The Dairy Indemnity Payment Program (DIPP), administered by the Farm Service Agency (FSA), assists dairy producers who experience financial losses due to the contamination of their milk or the necessary culling of dairy cows because of residues, chemicals, toxic substances, or nuclear radiation or fallout. This program provides payments to producers who cannot sell their milk on the commercial market due to contamination, ensuring they can recover from these adverse events and continue their operations.

Payments are made to compensate for the loss of income resulting from contaminated milk or removed cows. The amount of compensation is based on the fair market value of the milk or cows affected by the contamination. The program has been expanded to assist with livestock losses due to contamination, providing broader support to dairy producers affected by various forms of contamination.

DIPP also provides payments to manufacturers of dairy products only for products removed from the market because of pesticide contamination.

• Eligible applicants include dairy producers who have experienced milk contamination or have had to remove dairy cows from production due to residues, chemicals, toxic substances, or nuclear radiation.

• Producers must provide sufficient evidence of contamination and its financial impact.

• Have produced whole milk that was removed from the commercial market pursuant to the direction of a public agency;

• Not have been responsible for the milk contamination;

• Not have been indemnified for the same loss from another source;

• Certify compliance with Highly Erodible Land Conservation and Wetland Conservation provisions on form AD-1026;

• The affected farmer has adopted recommended practices and taken action to eliminate or reduce chemical residues of violating substances from the milk as soon as practicable following the initial discovery of the contaminated milk.

• Bred (young dairy female in gestation) and open (young dairy female not in gestation) heifers that contain elevated levels of chemical residues as the result of the same loss may be eligible for indemnification through DIPP.

• Affected farmers applying for indemnification of cows, including heifers, must develop a removal plan both to permanently remove the affected cows by depopulating the cows.

• Cows purchased or bred after the initial discovery of the milk contamination are not eligible for DIPP benefits due to the same loss.

• Affected cows that are marketed as cull or for breeding are not eligible for indemnification.

• Manufacturers are not eligible for payment when dairy products are contaminated by chemicals, toxic substances (other than pesticides) or nuclear radiation or fallout.

The indemnity payment to dairy producers is calculated by multiplying the number of cows milked, times the number of days milk is off the market, times base production in terms of pounds per cow per day, times the farm price for milk less hauling and promotion fees received by the producer. The base period used to establish base production is the calendar month immediately before the month the milk is removed from the commercial market.

The eligible period for Dairy Indemnity Payment Program (DIPP) benefits for milk for the same loss is limited to 3 calendar months from when the first claim for milk benefits is approved. An affected farmer that has an approved application for cow indemnity is no longer eligible for milk indemnity payments for the same loss.

DIPP cow indemnification will be based on the 100 percent value of the Livestock Indemnity Program (LIP) rates as applicable for the calendar year for milk indemnification established for dairy cows, per head. For any cow indemnification payment under this section or § 760.11, the affected farmer has the option to receive 50 percent of calculated payment in advance after application approval with the remaining fifty percent paid after the affected cows have been depopulated and removed. Otherwise, the affected farmer may choose to receive 100 percent of payment after cows have been depopulated and removed.

The indemnity payment to manufacturers of dairy products is calculated by multiplying the fair market value of the product times the amount of product removed from the market minus any salvage value of the product.

In the event that a farmer receives an indemnity payment under this subpart, and such farmer is later compensated for the same loss by the person (or the representative or successor in interest of such person) responsible for such loss, the indemnity payment shall be refunded by the farmer to the Department of Agriculture: Provided, That the amount of such refund shall not exceed the amount of other compensation received by the farmer.

Payment of indemnity claims will be contingent upon the availability of FSA funds to pay such claims. Claims will be, to the extent practicable within funding limits, paid from available funds, on a first-come, first-paid basis, based on the date FSA approves the application, until funds available in that fiscal year have been expended.

To apply for the Dairy Indemnity Payment Program, producers must submit an application to their local FSA office. The application process includes providing documentation of contamination, such as laboratory test results, and evidence of the financial impact, including records of milk production and sales. Detailed enrollment instructions and deadlines are available through the local FSA office.

The form must be filed with the county FSA office for the county where the farm headquarters are located no later than December 31 following the end of the fiscal year in which the loss occurred, or such later date as the Deputy Administrator may specify. The application for payment shall cover application periods of at least 28 days, except that, if the entire application period, or the last application period, is shorter than 28 days, applications for payment may be filed for such shorter period. Losses from more than one fiscal year cannot be included on one application form FSA-373.

To apply for DIPP for affected cows, the affected farmer must sign and file an application for payment on a form that is approved for that purpose by the Deputy Administrator and provide the information described in § 760.12. The approved removal plan must be submitted with the application for indemnification. The affected farmer certifies at application that once the cow indemnity application is approved, the affected farmer will dry off all lactating cows in a reasonable timeframe and discontinue milking.

• Dairy Indemnity Payment Program fact sheet (FSA, January 2018; predates the 2021 cow-indemnity rule)

• 7 CFR Part 760 Subpart A — Dairy Indemnity Payment Program

• Final rule adding cow indemnity, 86 FR 70689 (Dec. 13, 2021)

• Find your FSA office