Farm Bureau Offers Its Tweaks to Dairy Margin Protection Program

The American Farm Bureau Federation has outlined its recommended changes to the Dairy Margin Protection Program which it believes would increase the effectiveness of the risk management program.

Here’s what AFBF is suggesting:  

• Increase the feed ration formula by 10% for all producers.

• Reduce the premium rates 25% for MPP coverage for the first 4 million pounds of production history.

• Increase the premium rates 25% for MPP coverage for coverage above 4 million pounds of production history.

• Lower the maximum coverage level from $8/cwt to $7.

• Raise the catastrophic level from $4/cwt to $4.50.

• Increase the administrative fee from $100 to $300 for the catastrophic level of protection.

AFBF is also proposing raising the $20 million cap on livestock insurance programs to $75 million annually, leaving more dollars for a dairy revenue insurance program AFBF hopes to introduce in the near future.

“Our Board gave us a lot of flexibility in trying to come up with changes to make MPP work better for dairy farmers,” says John Newton, AFBF Director of Market Intelligence

Early in the 2012 farm bill debate, the original feed formula was scaled back 10% to make it fit within budgetary constraints. But doing so meant MPP trigger levels were hit far less often than they would have been under the original formula, and farmers received fewer indemnities as a result.

Resetting the feed formula back to its original setting will require other compromises.  “We're willing to work with Congress in turning the knobs to see what works,” says Newton.