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DMC margins 2019 1540x800.jpg NMPF

New dairy program signup numbers below estimates

Dairy Margin Coverage program offered under 2018 farm bill already paid out $302 million this year.

Despite offering another week for signup, the U.S. Department of Agriculture reported that 22,631 dairy producers out of a potential 40,000 signed up for the Dairy Margin Coverage (DMC) program. However, dairy industry groups continue to encourage participation in the program, which has offered a significant economic boost compared to the DMC’s predecessor program in the 2014 farm bill.

Only 1,400 producers signed up during the additional week USDA offered as an extension to the signup end date of Sept. 27. “Honestly, I thought it would be more,” U.S. Agriculture Secretary Sonny Perdue said while speaking at the World Dairy Expo in Madison, Wis. Perdue said he can’t understand why any operation producing fewer than 5 million lb. of milk would not participate.

The National Milk Producers Federation (NMPF) said DMC has paid out more than $302 million in its first year, and that’s $302 million more than what farmers would have received under the former Margin Protection Program (MPP), which would have actually cost farmers money in 2019, according to an NMPF analysis of USDA data.

NMPFDMC margins 2019 450x250.jpg

Monthly milk price/feed cost margins so far in 2019 have been above the $8/cwt. coverage cutoff that existed under MPP but below the new $9.50/cwt. coverage limit under DMC -- the stronger dairy safety net enacted last year in the farm bill. Under the old MPP rules, the total paid out under the entire program so far this year would have been $75,000 -- about $3 per farmer and a net loss for them after premium costs. Instead, the new DMC threshold has triggered hundreds of millions of dollars in much-needed assistance for dairy producers, showing the program’s value and helping farmers stay afloat who otherwise may not have been able to continue.

With signup for 2020 beginning on Oct. 7, that success is worth keeping in mind as farmers weigh the program’s affordable cost versus its proven benefits, NMPF said.

“The Dairy Margin Coverage program has proved its worth, with more than $300 million in farmers’ pockets as a result of our work on the farm bill with Congress and USDA,” NMPF president and chief executive officer Jim Mulhern said. “None of that assistance would have occurred under the MPP. We encourage farmers who haven’t already signed up for all five years of Dairy Margin Coverage to renew their signup for 2020 and for farmers who decided not to participate in the 2019 program to consider it in the future.”

A key change to the program that boosted aid was the inclusion of dairy-quality alfalfa in the feed cost calculation, which narrowed the difference between milk prices and feed costs and adjusted margins to better reflect dairy expenses -- a change that NMPF pushed for throughout legislation and implementation.

“We thank USDA not only for prioritizing the DMC in farm bill implementation but adjusting it in a way that provided additional benefit to producers,” Mulhern said. “The DMC’s success has truly been a partnership throughout, from a united dairy community that aided Congress as it crafted and approved the program to USDA’s work with that community in making it reality.”

TAGS: Policy Dairy
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