Dairy program proves beneficial

Over $100 million in DMC payments issued in April and May to 13,000 producers enrolled.

Jacqui Fatka, Policy editor

June 22, 2020

2 Min Read
dairy cows being milked milking parlor milkers holstien
DOLLARS FOR DAIRY COMING: USDA announced $350 million as part of a broader $2 billion package under the Pandemic Market Volatility Assistance Program.Toa55/iStock/Thinkstock

Many dairy producers saw a positive outlook for 2020 and decided to opt out of the Dairy Margin Coverage (DMC) program for covering their margin losses. Now, many have experienced significant losses over the last several months.

As of June 15, the Farm Service Agency (FSA) said it has issued more than $100 million in much-needed program benefits to dairy producers who purchased DMC coverage for 2020.

The April 2020 income over feed cost margin was $6.03/cwt., triggering the second payment of 2020 for dairy producers who purchased the appropriate level of coverage under the DMC program. The April margin reflects a drop of more than $3 from the March income over feed cost margin of $9.15/cwt.

Authorized by the 2018 farm bill, DMC is a voluntary risk management program that offers protection to dairy producers when the difference between the all-milk price and the average feed price (the margin) falls below a certain dollar amount selected by the producer. More than 13,000 operations enrolled in the program for the 2020 calendar year. Still, a large portion of dairy operators decided not to enroll due to the more positive outlook for 2020.

Beth Hodge, co-owner of Echo Farms in Hinsdale, N.H., was one of 21 farms that made the decision to purchase DMC coverage from among her state's 94 total dairy farms. She said the April payment from DMC was modest, but the May payment was significant and made a “huge difference” on her 70-cow farm.

Related:New dairy program signup numbers below estimates

While Midwest farmers are familiar with crop insurance, those in the Northeast generally have less experience with this type of risk management option. “I think we are feeling a lot more confident about the decision to do some risk management,” Hodge added.

FSA announced that the DMC safety net signup for 2021 coverage will begin Oct. 12 and will run through Dec. 11, 2020.

“If we’ve learned anything in the past six months, it’s to expect the unexpected,” FSA administrator Richard Fordyce said. “Nobody would have imagined the significant impact that current, unforeseen circumstances have had on an already fragile dairy market. It’s during unprecedented times like these that the importance of offering agricultural producers support through the delivery of farm bill safety net programs such as DMC becomes indisputably apparent.”

About the Author

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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