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Nearly 60% of producers signed up for new dairy program

Nearly 60% of producers signed up for new dairy program

One month left to sign up for Dairy Margin Coverage program established in 2018 farm bill.

To date, more than 60% of dairies with established production histories -- nearly 17,000 dairy operations -- have enrolled in the Dairy Margin Coverage (DMC) program since signup opened June 17. Dairy producers of all sizes still have time left to make the choice for an improved safety net, with DMC signup ending Sept. 20, 201.

DMC offers protection to dairy producers when the difference between the all-milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer. DMC, a retooling of dairy programs that was included in the 2018 farm bill, is guaranteed to pay all producers enrolled at the maximum $9.50/cwt. coverage level for every month of production through June, with another payment predicted for July, according to USDA data and forecasts.

USDA’s Farm Service Agency (FSA) began issuing program payments to producers on July 11. DMC provides coverage retroactive to Jan. 1, 2019. The producers who have signed up to date will receive more than $219.7 million in payments for January through June, when the income over feed cost margin was $8.63/cwt., triggering the sixth payment for eligible dairy producers who purchased the $9.00 and $9.50 levels of coverage under DMC.

Paul Bleiberg, vice president of government relations at the National Milk Producers Federation (NMPF), said the program offers a 25% discount to producers who sign up for the full five years of the farm bill compared to the other yearly signup option. To date, about half of producers who have signed up did so at the discounted rate. He suggested that some producers might be waiting as long as possible to sign up in order to better assess predicted market conditions in 2020 and whether payments would continue to be issued under the safety net.

USDA reported that Wisconsin has seen the most participation, with more than 4,832 dairy operations signing up, followed by Minnesota at 1,865, New York at 1,779, Pennsylvania at 1,511 and Michigan at 702.

“We’re encouraged by the number of dairy producers who have signed up for this new program, but we are hopeful that we will get more folks in the door,” USDA undersecretary for farm production and conservation Bill Northey said. “At this point in the signup process, we are well ahead of the number of producers covered at this time last year under the previous safety net program, with more producers enrolling every day. As we move into the homestretch, we expect more producers across the country to get coverage through DMC, and our team at FSA is really going above and beyond to make sure we get the word out there. The returns this year to date should speak for themselves.”

NMPF is recommending that its dairy farmer-members enroll in the improved program.

“Dairy farmers prefer to get their income from the market, but much-needed payments for the first half of this year provide welcome certainty for farmers,” NMPF president and chief executive officer Jim Mulhern said. “DMC offers better support for dairy farmers than its predecessor, the Margin Protection Program. It’s worthwhile for every farmer.”

DMC is a much more robust safety net for dairy producers of all sizes than the Margin Protection Program, which has been discontinued. Among the changes, DMC offers feed cost formula improvements to include dairy quality hay values, which better reflects the true cost of feeding dairy cows.

The new program also offers affordable $5.00 coverage that lowers premium costs by roughly 88%. “This creates more meaningful catastrophic-type coverage at a reasonable cost for larger producers without distorting the market signals needed to balance supply with demand,” NMPF said.

NMPF has a resource page on its website with more information about DMC, including this four-page brochure summarizing key facts about the program.

To view weekly enrollment, production and payment reports (posted at 2 p.m. [Eastern] each Monday), visit FSA’s DMC webpage.

TAGS: Policy Dairy
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