The next Livestock Gross Margin-Dairy (LGM-Dairy) sales period will begin Friday afternoon, March 28, according to Alan Zepp, Risk Management Program coordinator with Pennsylvania’s Center for Dairy Excellence. LGM-Dairy will be offered for sale by crop insurance agents, with producers eligible to purchase margin insurance for a 10-month period (May 2014-February 2015), or any combination of months during that period.
Although final rules are yet to be developed, dairy farmers planning to participate in the new USDA Dairy Margin Protection Program may not want to insure income margins through LGM-Dairy past August 2014, due to a prohibition of participating in both programs simultaneously. USDA is required to develop DMPP rules by September 2014.
The May 2014-February 2015 average of expected margins is $16.53/cwt., the highest ever; about $2.27 above the 3-year actual average for the May-February period; and about $3.75 (20%) above the 5-year average actual margin for the period.
The premium for a $0 deductible policy to insure a margin of $16.40/cwt. is estimated at 69¢/cwt. (21¢/cwt. to insure a $15.40/cwt. margin with a $1 deductible policy). Even the $1 deductible policy insures a margin above the 3-, 5- and 10-year average actual margin, Zepp noted.
“Protecting Your Profits” information and a recorded podcast are posted at http://centerfordairyexcellence.org/protecting-your-profits/. The website also adjusts LGM-Dairy estimated margins weekly, based on updated futures prices.
Zepp’s next call/webinar will be April 23, providing information for the April 25-26 LGM-Dairy sales period. For further information, producers can contact him at firstname.lastname@example.org or phone 717-346-0849.