USDA outlines LGM-MPP coverage transition

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While much remains to be unveiled regarding new federal dairy policy, USDA’s Risk Management Agency released a bulletin describing general terms by which dairy farmers can transition from their current Livestock Growth Margin for Dairy (LGM-Dairy) coverage to the new Margin Protection Program (MPP). By law, dairy farmers may not participate in both programs.

In a bulletin to approved insurance providers and USDA field offices, June 26, RMA administrator Brandon Willis said RMA and USDA’s Farm Service Agency (FSA), which will administer MPP-Dairy, were working together to assure an appropriate transition process.

Once implemented, MPP-Dairy will replace the Milk Income Loss Contract (MILC) program. MPP-Dairy is expected to be available by Sept. 1 through FSA, WIllis said. It will be a voluntary program, offering both catastrophic coverage and various levels of buy-up coverage. 

As outlined in the bulletin, dairy farmers with an active LGM-Dairy policy may register for MPP coverage once enrollment opens; however, the coverage will not start until after their current LGM-Dairy policy concludes. MPP-dairy coverage would start during the next available two-month period, as outlined under the 2014 Farm Bill. 

According to Willis, the transition period will provide dairy farmers with maximum flexibility, allowing them to transition to the MPP-Dairy program in either the 2014 or 2015 crop year, with partial years of MPP-Dairy coverage. This will allow those who already have LGM-Dairy target marketings insured into 2015 to participate in MPP-Dairy, while still meeting the contractual requirements of the LGM-Dairy insurance contract. 

As noted, transition to the MPP-Dairy may occur in the next available month after all target marketings under LGM-Dairy are completed. The next available month following completion of the target marketings would be the first month of consecutive 2-month periods: January/February; March/April; May/June; July/August; September/October; and November/December).

For example, a dairy farmer who purchased LGM-Dairy in May 2014, with target marketings through April 2015, would not be eligible for MPP-dairy coverage until May 2015. A farmer purchasing LGM-Dairy in June 2014, with target marketings through May 2015, would not be eligible for MPP-dairy coverage until July 2015, which could result in a gap in coverage.

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