Average Dairy MPP Payment $6,650--So Far

Milk tanker truck arriving at farm. ( Wyatt Bechtel )

As of close-of-business July 3, 21,212 dairy farmers had enrolled in the Dairy Margin Protection Program.

USDA is still compiling numbers, however, so the enrollment figure is not yet final, says Wayne Maloney, a spokesman for USDA’s Farm Service Agency.

FSA has paid out about $141 million in MPP indemnity payments to those enrollees. That’s about $6,650 per enrolled farm. The payments were made based on the following milk/feed margin:

Month                                Milk/Feed Margin                          Indemnity Payment at $8

                                       Coverage Level

January                               $8.12                                                                 $0.00

February                               6.88                                                                   1.12

March                                   6.77                                                                   1.23

April                                       6.62                                                                   1.38

May                                       6.78                                                                   1.22

More indemnity payments are likely coming, since current futures market projections show a possible payment of more than $2/cwt in June and more than 50¢/in July.

The irony is that at least 45% of U.S. dairy farmers did not sign up for the program, even though they would have received the payments. The premium for Tier 1 coverage for the first 5 million pounds of milk production history is just 14.2¢/cwt.

Even large farms, up to 20 million pounds of production, would have been eligible to receive coverage and payments at the lower premium rate on their first 5 million pounds of production. But many have soured on the program and have opted out or taken just catastrophic, $4/cwt coverage.