The U.S. Department of Agriculture will begin accepting applications for the Dairy Margin Coverage (DMC) program on Oct. 13, 2020, for 2021 enrollment.
“This year has been a market roller coaster for the dairy industry, and the Dairy Margin Coverage program is a valuable tool dairy producers can use to manage risk,” Bill Northey, USDA undersecretary for farm production and conservation, said during a roundtable at a dairy in Chippewa Falls, Wis. “We were excited to roll out this new and improved program through the 2018 farm bill, and if you haven’t enrolled in previous years, we highly encourage you to check it out.”
Signup runs through Dec. 11, 2020. 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. DMC payments were triggered for seven months in 2019 and three months so far in 2020. More than 23,000 operations enrolled in DMC in 2019 and more than 13,000 in 2020.
To determine the appropriate level of coverage for a specific dairy operation, producers can utilize the recently updated online dairy decision tool, which is designed to assist producers with calculating total premium costs and administrative fees associated with participation in DMC. An informational video is available, too.
Improvements to the decision tool, made in cooperation with representatives from the University of Minnesota and the University of Wisconsin, include historical analyses that illustrate what DMC indemnity payments might have been had the program been available over the previous two decades. The analysis indicates that, over the course of time, DMC payments made to producers exceeded the premiums paid. These enhancements to the tool provide a more comprehensive decision support experience for producers considering DMC.
In addition to DMC, USDA offers a variety of programs to help dairy producers, including insurance, disaster assistance and conservation programs. Most recently, the first round of the Coronavirus Food Assistance Program (CFAP) provided $1.75 billion in direct relief to dairy producers who faced price declines and additional marketing costs due to COVID-19 in early 2020. Now, signup is underway for the second tranche of CFAP, which provides another round of assistance for dairy producers and many other eligible producers.