There will be 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.
USDA must also create administrative rules and enforcement procedures, and establish an appeals process.
In the interim, 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. Current milk and feed futures prices indicate no MILC payments would be made during the period, however.
The bill repeals the Dairy Product Price Support Program, Dairy Export Incentive Program and the Federal Milk Marketing Order Review Commission, but extends the Dairy Forward Pricing Program, the Dairy Indemnity Program and the Dairy Promotion and Research Program until 2018.
And, within 120 days of initial operation of the Margin Protection Program, USDA must establish and administer a dairy product donation program to address low-margin periods experienced by participating dairy operations; and provide nutrition assistance to individuals in low-income groups.