1. Module 3 - Calculating DDAP-III Benefits Dairy Disaster Assistance Payment Program DDAP-III

2. 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.

3. 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

4. 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

5. 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

6. 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

7. 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

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

9. 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

10. Module 3 - Calculating DDAP-III Benefits Calculating Payment Calculated 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

11. 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.

12. Module 3 - Calculating DDAP-III Benefits Alternative Payment Method DDAP-III benefits will be based on a 20% loss threshold of the total estimated base period production for each applicable claim period. LOSS LEVELPAYMENT 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%

13. 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

14. 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

15. Module 3 - Calculating DDAP-III Benefits 95 Percent Cap Calculation 95% cap is calculated by multiplying: Example Operation’s cows, times100 cows Annual NASS for State, times21,404/cow (CA) Mailbox price, times$0.1388 (CA/05) 95 percent$282,233

16. 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

17. 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

18. Module 3 - Calculating DDAP-III Benefits Payment Provisions APPLICABLE: Offset Assignment Withholding PPI Direct deposit NOT APPLICABLE: Gross revenue Production limit Advance payment