DMC Payment Triggered for the Second Time This Year
For the second time this year, a Dairy Margin Coverage (DMC) payment will be issued. The USDA’s Farm Service Agency announced that February’s DMC income over feed costs calculation is $6.19/cwt. Milk production covered at the $9.50 level will receive $2,622.59 for each one million pounds insured.
Phil Plourd, president of Ever.ag, says that we’ve seen a little improvement in the numbers over the past few weeks, although the margin picture for 2023 continues to look weaker compared to what we saw in 2022.
“We’re not in the total doom-and-gloom camp, but it would be surprising to see a material, durable increase in milk prices or a sustained decrease in feed costs over the next few months,” he says.
January’s DMC income over feed calculation was $7.94. Currently, the Farm Service Agency projections show DMC income over feed costs remaining below $9.50/cwt through October of this year. Even in 2022, with record milk prices, two months – August and September – triggered a DMC payment due to elevated feed costs.
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.
Jim Mulhern, NMPF CEO, says DMC’s catastrophic coverage level is at the top of his team’s farm bill list.
“The catastrophic coverage level within the basic DMC includes up to 5 million pounds of annual protection, which is about a 200 to 220 cow herd. We’re looking at DMC’s tier 2—anything above basic—adjustments because those markets collapsing would be more akin to a truly ‘catastrophic’ event,” says Mulhern.