While considerably lower than the previous month’s payouts, a Dairy Margin Coverage (DMC) payment was triggered once again for the month of September.
At just $1.06 per cwt., the September DMC margin triggers an indemnity payment coverage level of $9.50 per cwt. This is calculated to be $755.54 for each one million pounds enrolled. This DMC payment reflects higher milk price – the highest since March and lower feed prices, with declining corn and soybean meal prices.
Katie Burgess, director of risk management with Ever.Ag, encourages producers to continue to sign up for USDA’s Dairy Margin Coverage (DMC) program.
“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.
“While livestock and crop producers alike have been financially impacted by catastrophic natural disaster events, dairy producers’ financial stressors have been compounded by significant market volatilities,” says FSA Administrator Zach Ducheneaux. “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.”
Jim Mulhern, National Milk Producers Federation CEO, says DMC has been very helpful this year to producers from coast to coast.
“It’s hard to call it a bright light because we’re talking about a depressing price situation. But it’s clear that without DMC payments that producers are receiving, there are a lot of small and medium-sized farmers who would be in a much worse situation,” he says. “It is filling that gap in a very important way, and we need that policy to continue for the future.”
Sarina Sharp, an analyst with the Daily Dairy Report, says that the dairy safety net has helped to sop up some—but not all—of the losses on dairy farm balance sheets.
The USDA shares that to date, producers have received more than $1.2 billion in much-needed economic support for 2023.
