Producers Await Dairy Margin Coverage Sign up for the 2024 Calendar
As producers look to the end of the year, one trip they have not made yet is to the USDA Farm Service Agency (FSA) office to select a coverage level to participate in the Dairy Margin Coverage (DMC) program in 2024. This is because no announcement has been made yet about the enrollment period for the year ahead.
Of course, dairy producers are hoping for stronger milk prices to reflect a more profitable milk check next year. However, the outlook for the first quarter milk prices doesn’t look too promising, which has producers turning to plan B which is hoping DMC payouts generate a healthy sum in the year ahead, like it did in 2023.
As noted in the October milk marketings report, DMC indemnity payments were distributed throughout the first 10 months of 2023 and have already topped $1.27 billion, averaging $74,453 per dairy operation. About 17,059 dairy operations were enrolled in the 2023 DMC program, representing about 74.5% of operations with established production history. All 2023 DMC indemnity payments are subject to a 5.7% sequestration deduction.
Katie Burgess, director of risk management with Ever.Ag, encourages producers to continue to sign up for USDA’s DMC program in the future.
“It has a strong track record of generating producer payouts when margins get squeezed,” she said during the U.S. Farm Report live taping at World Dairy Expo in Madison, Wis., earlier this month.
DMC allows producers to select a margin between the milk price and average feed cost to determine at which level they receive assistance.
The DMC program was authorized in the 2018 farm bill to offer protection to producers when the difference between the all-milk price and the average feed price falls below the producer-selected margin trigger.
FSA Administrator Zach Ducheneaux says Dairy Margin Coverage is a key risk management tool for dairy operations to financially endure the numerous, and often unpredictable uncertainties that adversely impact market prices for milk.
Sarina Sharp, an analyst with the Daily Dairy Report, says the dairy safety net has helped to sop up some—but not all—of the losses on dairy farm balance sheets.
Earlier this year, the continuing resolution was passed and signed into law that extends the current Farm Bill for one year through Sept. 30, 2024. This spells relief for the current farm bill program to stay the same into 2024. Programs like DMC will stay in place for at least another year. But for now, producers await the announcement of 2024 DMC sign-ups. Stay tuned to dairyherd.com for updates on the DMC program.
