The House and Senate Conferees released a Farm Bill Monday night. With the House rules requiring three days for a vote, and the House Republicans going on retreat on Thursday, reports indicated House Majority Leader Eric Cantor (R-Va.) has included the Farm Bill conference report on his legislative schedule for possible consideration on Wednesday.
Read the Farm Bill conference report here. The Dairy Title is on pages 95-117 of the 949-page document.
Under the bill, USDA must establish a Margin Protection Program for dairy producers no later than Sept. 1, 2014. All U.S. dairy operations will be eligible to participate, provided they register (method to be determined by USDA) and pay an annual $100 fee to cover administrative costs.
If a participating dairy operation is operated by more than one producer, all will be treated as a single dairy operation. If a dairy producer operates two or more dairy operations, each must register separately to participate.
To participate, dairy operations must establish production history. Initially, the production history of a dairy operation for the margin protection program is equal to the highest annual milk marketings of the participating dairy operation during any one of the 2011, 2012 or 2013 calendar years. The individual production history will grow by the U.S. average production growth in subsequent years. So, producers who expand significantly beyond average U.S. growth will not be able to protect the additional milk production under this program. Beyond that, there is no significant penalty – there is no dairy market stabilization program.
For participating dairy farms in operation for less than a year, the participating dairy operation may determine a production history by using the volume of the actual milk marketings for the months the participating dairy operation has been in operation extrapolated to a yearly amount; or estimate of the actual milk marketings of the participating dairy operation based on the herd size relative to the national rolling herd average.
Dairy operations may select margin insurance to protect between a $4.00/cwt. to $8.00/cwt. milk-feed price margin in 50¢ increments. They may also elect to cover a percentage of their milk production in 5% increments, beginning with 25% and not exceeding 90% of the production history.
There are two tiers of pricing for annual premiums. The first 4 million lbs. of milk sold annually will have significantly lower premiums than milk production above 4 million lbs. The $4.00/cwt. margin coverage level is available at no cost, but the premiums become increasingly expensive as margins increase. Additionally, premiums below the $8.00 level will be discounted by 25% for the first two years of the program (2014 & 2015) for the first 4 million lbs. of production history.