Mulhern: MPP Not a Revenue Enhancement Program

With milk prices down 30% over last year, the Margin Protection Program (MPP) was a hot topic at the National Milk Producers Federation (NMPF) annual meeting in Orlando. Yesterday, AgriTalk Radio’s Mike Adams spoke with Jim Mulhern, President and CEO of NMPF, to get his perspective of the issues surrounding the program

Mulhern says the biggest issue facing the two-year-old program is a misunderstanding of how it works. According to NMPF the program “pays benefits when the margin between the U.S. all-milk price and the national average feed costs falls below the level of coverage chosen by the producer for any one of six consecutive two-month periods during the year.”

Mulhern says the margins don’t reflect any one farm’s milk price or feed costs.

“It’s an index, a basis for you [dairy farmers] to compare your own cost to that national index,” he says.

Coverage through the program can be purchased at margin levels beginning at $4 and all the way up to $8. Producers at the meeting expressed frustration about the lack of payments this year.

Mulhern admits producers across the country are feeling the squeeze of an almost $8 margin. But after a year of the highest milk prices in recent history, he says producers must remember the current price reflects the average of what producers have experienced over the last 15 years.  

“This program was designed not to be a revenue enhancement program,” he says. “but to provide a safety net.”

USDA has extended the deadline to sign up for the federal program to November 20. Mulhern recommends producers who participated last year at least pay the $100 fee to have “catastrophic coverage”. Economists don’t predict a steep decline in milk prices for 2016, year but Mulhern points out nobody predicted 2009 either. “We can’t predict the future,” he says. “It’s a safety net and it’s there for us, so we need to use it.”

Listen to more from Mulhern on the margin protection program below.