Sign Up Deadline Critical to Farm Bill Margin Insurance

Farm Journal logo

The devil is in the farm bill details, and no detail is probably more important than the deadline dairy farmers will be given to sign up for the new margin insurance program.

Jim Mulhern, National Milk Producer Federation president and CEO, participated in a farm bill panel that wrapped up the Associated Milk Producers Association annual meeting in Minneapolis this morning. If the deadline is too near the start of the insurance program, farmers will be able to easily project ahead what milk and feed prices will be and what levels of insurance to take.

While that would allow farmers to take maximum advantage of the program, it could also be self-defeating in the end. With margins covered and no breaks on production, the indemnity payments could be on-going. That, in turn, could raise the cost of the program to taxpayers to untenable and unsustainable levels.

Mulhern says USDA is considering a window between sign-up and program start of  90 to 120 days. That would provide at least some uncertainty to future prices.

There are a number of other questions facing USDA rule writers. Among them:

• Whether farmers can opt in and out of margin insurance and have the option of using Livestock Gross Margin insurance when they are not using margin insurance. Farm bill language is clear that farmers cannot do both at the same time.

• When margin insurance premiums are due.

• How farm transfers will be handled, and how new operations will be defined.

• Which insurance rates will apply to farms for the first 4 million lb. of production when farms have more than 4 million lb. of annual production.

It is unclear when USDA will issue the new rules. But Mulhern and others say it could be late summer before the rules are issued, even though farm bill language mandates the program be implemented September 1, 2014.

Phil Plourd, with Blimling and Associates, says the new program essentially establishes an "implied" support price of $14.87/cwt in 2014, if you add the average feed cost this year to the $4 margin insurance. In 2015, the implied support price is $14.40/cwt.

At the same time, actual market prices can fall to what will clear the market. "So you could get a [market] clearing price faster, especially in times of disaster," he says. With the old support program price of $9.90/cwt, that effectively set the floor for world prices as well as U.S. domestic prices. The new program has no such floor.

In the end, Mulhern agrees the program offers a much better safety net than the old dairy support program. "The key will be how we use this program moving forward," he says.

 

 

 

 

 

 

Latest News

Skills Survey Reveals U.S. Agriculture & Food Industry Workforce Needs and Gaps
Skills Survey Reveals U.S. Agriculture & Food Industry Workforce Needs and Gaps

U.S. employers report challenges in finding suitable job candidates with work-ready skills to fill open roles in ag. The AgCareers.com U.S. Skills Survey offers insights, data and trends to address skill development.

Built Out of Love: How Two Sisters Created a Super-Fast-Growing Yogurt Company
Built Out of Love: How Two Sisters Created a Super-Fast-Growing Yogurt Company

Travel to the rolling hills of Pennsylvania, and you’ll meet Hayley and Stephanie Painter who not only made the Forbes 30 under 30 list, but have also created one of the fastest growing yogurt company in the U.S.

"Boring" Technology Will Reshape Dairy Over the Next 10 Years
"Boring" Technology Will Reshape Dairy Over the Next 10 Years

Once a technology becomes a boring experience it means it has become proven, well-adopted, and easy to utilize. There are three "boring" technologies silently shaping the industry.

Influential Dairy Leaders Awarded World Dairy Expo Recognition Awards
Influential Dairy Leaders Awarded World Dairy Expo Recognition Awards

World Dairy Expo is delighted to announce the recipients of the 2024 Expo Recognition Awards. These individuals have made remarkable contributions to the dairy industry and their communities.

Meat Institute: Properly Prepared Beef is Safe to Eat; HPAI is not a Food Safety Threat
Meat Institute: Properly Prepared Beef is Safe to Eat; HPAI is not a Food Safety Threat

According to the Centers for Disease Control and Prevention (CDC) and USDA food safety experts, properly prepared beef is safe to eat and is not a food safety risk to humans.

BREAKING: Mystery Illness Impacting Texas, Kansas Dairy Cattle is Confirmed as Highly Pathogenic Avian Influenza Strain
BREAKING: Mystery Illness Impacting Texas, Kansas Dairy Cattle is Confirmed as Highly Pathogenic Avian Influenza Strain

USDA says genetic sequencing revealed the mystery illness impacting Texas dairies is the same strain of Highly Pathogenic Avian Influenza (HPAI) that's been in the U.S. The virus is carried by wild waterfowl.