U.S. Senator Urges Senate Leadership to Fortify Margin Protection

In an effort to help dairy farmers during unstable market conditions, U.S. Senator (D-WI) Tammy Baldwin has sent a letter to Senate leadership urging them for an update and expansion of the Dairy Margin Protection Program (MPP).

The letter was addressed to Senate Majority Leader Mitch McConnell (R-KY), Minority Leader Chuck Schumer (D-NY) and Senate Appropriations Committee Chairman Thad Cochran (R-MS) and Vice Chairman Pat Leahy (D-VT), stresses how MPP provides economic security to dairy farmers.

Policy changes could be in store for MPP when the FY2018 Agriculture Appropriations bill is approved by the Senate. Senator Baldwin hopes additional provisions can be made to aid farmers.

“Our family dairy farmers are facing extremely challenging times and Washington has failed to respond,” Senator Baldwin says. “It is critical that we update the Dairy Margin Protection Program, which is an important tool for the economic security of dairy farmers. I am hopeful that my Senate colleagues will join me and take action to do right by our farm families and the rural communities they support.”

Dairy MPP was established when the 2014 Farm Bill passed and has acted another risk management tool for dairy producers. However, the program has come under scrutiny for not providing enough benefit for those who elect to use it.

“This program is an essential tool for dairy farmers, but it has fallen short of providing meaningful protection and needs updates that would be effective this year in order to respond to the challenges our family farmers face. I request that you include updates to better reflect the costs of production faced by farmers, as well as the margin needed to provide adequate catastrophic protection,” Senator Baldwin writes in the letter.

Additionally, Baldwin would like to see improvements to the Livestock Gross Margin tool. The full letter can be read here.

When the Senate Appropriations Committee approved the FY2018 Agriculture Appropriations in July dairy industry groups applauded the work done to improve Dairy MPP.

“The enhancements to the dairy Margin Protection Program contained in the bill would strengthen the program and help pave the way for additional necessary improvements in the upcoming farm bill,” said National Milk Producers Federation president and CEO Jim Mulhern.

At the time of the Senate Appropriations Committee approval, Vice Chairman Pat Leahy (D-VT) released a statement outline the five improvements to Dairy MPP:

  1. Moves the MPP calculations and potential payments to a monthly basis (currently bimonthly) to improve the program’s accuracy and timeliness in responding to market conditions.
  2. Dramatically reduces the premium costs for Tier I enrollment to incentivize producer participation at meaningful coverage levels of protection.
  3. Adjusts the Tier I threshold level corresponding to substantially lower premium costs, to the first 5 million pounds of production, up from the current level of 4 million pounds of production (equivalent to 185 cows). This will better align the program with the median U.S. dairy farm size, 223 cows, and encourage more farms to participate and secure meaningful levels of protection to offer an effective farm safety net.
  4. Waives $100 administrative fees for underserved producers, bringing the program in line with other USDA programs with similar service fee waiver, such as the Noninsured Crop Disaster Assistance Program (NAP).
  5. Continues the program’s current regulation offering farmers a one-time election to participate in the program for the length of the Farm Bill.