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News & Media: Staff Columns

Dairy Margin Coverage signup underway

Tuesday, June 25, 2019   (0 Comments)
Posted by: Aaron Stauffacher, assoc. director of gov. affairs
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The clock has started ticking on signing up for the new federal Dairy Margin Coverage program.

DMC, created in the 2018 Farm Bill, was fashioned to replace the Margin Protection Program (MPP). Coverage is retroactive to Jan. 1, so farmers have the benefit of knowing several months of margins when deciding on their coverage. The deadline for signing up is Sept. 20.

When engaging lawmakers in Washington on this issue in the run-up to the farm bill, Edge focused on making sure dairy policies provided workable tools for risk management decisions on farms of all sizes. Several of the final changes aligned with our advocacy. Most importantly, the farm bill allows simultaneous use of DMC and other tools. Also, the program makes using DMC regardless of farm size more feasible.

Here are noteworthy program changes to DMC and important considerations:

  • Coverage levels of $8.50, $9.00 & $9.50 were added to Tier 1 and premium rates were adjusted for both Tier 1 and Tier 2 premium rates. Certain Tier 1 and Tier coverage levels are now decoupled. If farms choose a Tier 1 coverage level of $8.50 or more, the farm can select any different coverage level for Tier 2.
  • Farmers will now be able to choose coverage levels from 5% to 95% in 5% increments which removes the previous 25% coverage floor.
  • There is a 25% premium discount to lock-in a coverage level decision for the next five years.
  • Production histories will still be based off 2011, 2012, 2013 numbers. Farms that were using MPP will use their 2018 production history but for those who did not will revert back to 2011-2013. USDA will not be able to make milk production adjustments going forward.
  • Farmers who previously used MPP from 2014-17 may be eligible to have paid-in premiums reimbursed for benefits not paid out. Those farms can use a 75% credit of that amount towards DMC premiums or receive 50% to be refunded in cash.
  • DMC can now be used in conjunction with Livestock Gross Margin-Dairy (LGM-D) and is allowed to cover the same milk or be used in conjunction with insurance tools like Dairy Revenue Protection (DRP).

The USDA recently updated the method to calculate the alfalfa hay price used in the feed cost to more accurately reflect the hay used by farmers. Due to this change, previously released income over feed margins were updated: April $8.82/cwt., March $8.66/cwt., February $7.91/cwt. and January $7.71/cwt.

Click here to read Secretary of Agriculture Sonny Perdue’s announcement of the DMC signup.

Click here for the USDA-Farm Service Agency DMC website, which includes an interactive decision tool and user video.

Congress and the USDA are monitoring implementation of the program. Please keep me informed of any difficulties so we can relay your concerns. Email me at astauffacher@voiceofmilk.com.


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