Margin Premium per cwt. on nnual milk production
Coverage < 4 million lbs. > 4 million lbs.
$4.00 None None
$4.50 $0.01 $0.02
$5.00 $0.03 $0.04
$5.50 $0.04 $0.10
$6.00 $0.06 $0.16
$6.50 $0.09 $0.29
$7.00 $0.22 $0.83
$7.50 $0.30 $1.06
$8.00 $0.48 $1.36
Calculation of average feed costs
USDA will calculate a monthly national average feed cost to produce 100 lbs. of milk, using:
• the average price of corn per bushel received by U.S. farmers, as reported in the monthly Ag Prices report, multiplied by 1.0728; plus
• the average price of soybean meal received in central Illinois, as reported in USDA’s Market News Monthly Soybean Meal Price report, multiplied by 0.00735; plus
• the price of alfalfa hay received during that month by U.S. farmers, as reported in the monthly Ag Prices report, multiplied by 0.0137.
Calculation of actual dairy production margin
USDA will calculate the actual dairy production margin for each consecutive 2-month period by subtracting the average feed cost for the consecutive 2-month period from the all-milk price for that consecutive 2-month period.
A participating dairy operation shall receive a margin protection payment whenever the average actual dairy production margin for a consecutive 2-month period is less than the margin level selected by the participating dairy operation. Payment will be based on the percentage of annual milk production covered, divided by 6 for the two-month period.
USDA will create administrative rules and enforcement procedures, and establish an appeals process. The margin protection program is scheduled to end on Dec. 31, 2018.
LGM-Dairy, MILC, other programs
A dairy operation may participate in the margin protection program or the USDA Risk Management Agency’s Livestock Gross Margin for Dairy (LGM-Dairy) program, but not both.
The bill provides for the temporary continuation of the Milk Income Loss Contract (MILC) program until the Margin Protection Program is in place, or Sept. 1, 2014, whichever is sooner.