USDA announced earlier today that open enrollment for the Dairy Margin Coverage (DMC) program will begin Monday, Dec. 13 through Feb. 18. This year’s DMC signup is accompanied by new enhancements that add more value to producers seeking protection against unforeseen market risks.
National Milk Producers Federation (NMPF) is urging farmers to sign up for the maximum coverage in 2022. “Signing up for DMC, which offers cost-effective margin protection for small and medium-sized producers as well as inexpensive catastrophic coverage for larger dairies, is a no-brainer for 2022, especially considering the improvements we fought for in Congress and advocated for at USDA,” Jim Mulhern, president and CEO of NMPF says. “This year has illustrated just how valuable this program is for those producers that can take advantage of it, and DMC will once again be an essential part of many farmers’ risk management in the coming year. We thank Congress and USDA for making the program stronger and helping dairy farmers in challenging times.”
A record of more than $1.1 billion in DMC payments are expected to be distributed to dairy producers under the 2021 program, according to USDA.
Supplemental DMC Enrollment
Eligible dairy operations with less than 5 million pounds of established production history may enroll supplemental pounds based upon a formula using 2019 actual milk marketed, which will result in additional payments. Producers will be required to provide FSA with their 2019 milk marketing statement. Supplemental DMC coverage is applicable to calendar years 2021, 2022 and 2023. Participating dairy operations with supplemental production may receive retroactive supplemental payments for 2021 in addition to payments based on their established production history. Supplemental DMC will require a revision to a producer’s 2021 DMC contract and must occur before enrollment in DMC for the 2022 program year. Producers will be able to revise 2021 DMC contracts and then apply for 2022 DMC by contacting their local Farm Service Agency (FSA) office.
DMC 2022 Enrollment
After making any revisions to 2021 DMC contracts for Supplemental DMC, producers can sign up for 2022 coverage. The signup period runs from Dec. 13, 2021, to Feb. 18, 2022. According to Erick Metzger, general manager, National All-Jersey Inc., based on the first three years of the program, the $9.50 level of coverage provided the greatest return.
Updates to Feed Costs
USDA is also changing the DMC feed cost formula to better reflect the actual cost dairy farmers pay for high-quality alfalfa hay. FSA will calculate payments using 100% premium alfalfa hay rather than 50%. “By my calculations, this change would have increased 2021 year-to-date feed costs by an average of $0.22/cwt,” Metzger reports. “The impact will be approximately $1,700 for each 1 million pounds of milk insured that received indemnity payments.”
According to NMPF’s press release statement, the change in the hay price will be retroactive to January 2020.
These improvements occurred at NMPF’s urging, noting the alfalfa recalculation also will further benefit dairy in the next farm bill, as it will increase the amount of funds available for all programs that benefit dairy farmers.
