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Perdue allowing dairy farmers to opt out of MPPPerdue allowing dairy farmers to opt out of MPP

Program has been a disappointment to producers.

Krissa Welshans 1

August 31, 2017

3 Min Read
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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

The U.S. Department of Agriculture's Farm Service Agency announced Aug. 31 that starting Sept. 1, 2017, dairy producers can enroll for 2018 coverage in the Dairy Margin Protection Program (MPP). However, it also announced that Agriculture Secretary Sonny Perdue is allowing producers the choice to opt out.  

“Secretary Perdue is using his authority to allow producers to withdraw from the MPP Dairy program and not pay the annual administrative fee for 2018,” said Rob Johansson, acting deputy undersecretary for farm production and conservation. “The decision is in response to requests by the dairy industry and a number of MPP Dairy program participants.”

To opt out, a producer should not sign up during the annual registration period.

“By opting out, a producer would not receive any MPP Dairy benefits if payments are triggered for 2018,” USDA said, adding that Perdue’s provision will be for 2018 only and is not retroactive.

Jim Mulhern, president and chief executive officer of the National Milk Producers Federation (NMPF), applauded Perdue’s decision, saying the Dairy MPP, in its current form, has been a disappointment to many dairy farmers.

“Today’s announcement to allow farmers to opt out of the program in 2018 is a welcome development in that it acknowledges the widespread dissatisfaction among farmers enrolled in the program," Mulhern said. "Simply put, the way the program was enacted in the 2014 farm bill, it does not meet the needs of America’s dairy farmers today, and declining participation levels amply illustrate farmers’ disenchantment with the MPP.”

Farmers who choose to opt out of the Dairy MPP will be able to enroll in the Livestock Gross Margin program for 2018, Mulhern explained.

NMPF has been working both with USDA and Congress to make significant improvements to the MPP.

“We had earlier suggested to USDA that, given this level of dissatisfaction, one option would be to allow farmers to opt out of the MPP in the coming calendar year,” NMPF added.

In a statement, Zippy Duvall, president of the American Farm Bureau Federation, said the Farm Bureau is pleased with the USDA announcement to allow dairy producers to exit the Dairy MPP. "Dairy farmers need access to effective risk management tools. Farm Bureau and our grassroots members look forward to working with USDA and Congress to enhance the dairy safety net,” he said.

Duvall explained that the Dairy MPP -- which was introduced in the 2014 farm bill -- was intended to offer protection against declines in the national average income-over-feed cost margin. However, he said dairy farmers participating in the program were required to pay a $100 administrative fee each year for the basic coverage option and, once enrolled, were required to remain in the program for the five-year life of the farm bill.

“Approximately 24,000 dairy farms, representing 80% of the U.S. milk supply, are currently enrolled in the program. However, this year, only 2% of the milk enrolled participated at levels above the basic coverage option. The low participation rate is due to the poor performance of MPP in providing a viable safety net to dairy farmers,” he said.

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