Dairy Margin Coverage

Dairy's 2026 Safety Net: Producers are Moving from DMC to DRP

Tue, 24 Feb 2026 14:56:55 GMT

In the high-stakes world of dairy production, the margin between a profitable versus a catastrophic year is often measured in pennies. For decades, the industry relied on a relatively simple equation: the price of milk minus the price of feed. In 2026, that equation is more complex. The tools that once served as a reliable safety net are now facing a paradox – a reality where the data says producers are thriving, but the checkbook says otherwise.

To understand the future of dairy survival, the two pillars of the federal safety net must be dissected: Dairy Margin Coverage (DMC) and Dairy Revenue Protection (DRP). While one is a legacy program struggling to adapt to a world of hidden costs, the other is a flexible, high-tech shield that is rapidly becoming the industry standard.

The Dairy Margin Coverage Era: A Foundation in Flux

The Dairy Margin Coverage program, created by the 2018 farm bill, was designed to be the ultimate insulator against market shocks. Through various iterations from the 2014 farm bill’s Margin Protection Program for Dairy (MPP-Dairy) to the current DMC program, the program has been a statistical success. For most producers, the math is compelling: An average premium of 15 cents per cwt yields an average payment of $1 per cwt.

The structure for DMC, which is administered by the Farm Service Agency (FSA), is simple. Tier 1 offers a “safe harbor” for the first 5 million pounds of production, allowing for coverage up to $9.50 per cwt. Tier 2 allows larger operations to cover their excess production at a lower $8 cap and higher premiums.

However, the “success” of the DMC has hit a wall and is increasingly becoming a thing of the past. The formula relies on four main ingredients: the National All-Milk Price, corn, soybean meal and premium alfalfa. When these crop prices are low, the “calculated” margin looks healthy.

This is where the paradox lies.

“When crop prices are this low, it makes the milk margin under the DMC program look really high on paper, which is why the program didn’t trigger payments at any coverage level between May 2024 and November 2025,” says Danny Munch with the American Farm Bureau Federation.

The December 2025 pricing data finally points to the first payments in more than a year, but only for producers covered at the highest available $9.50 margin (at a $9.42 per cwt margin), he adds.

According to Katie Burgess with Ever.Ag, the DMC program uses national numbers for both the milk price and feed costs, so it has never really reflected the reality of any individual dairy operation.

“For the sake of keeping it simple and straight forward, I believe [the DMC program] does a fine job of representing a margin over feed. Of course, it’s not capturing the non-milk or feed data, so it’s not accounting for the higher non-feed costs the past few years. It’s also not making any adjustments for higher cull cow and calf revenue either,” she says. “For a producer really looking to dial in their margins, it’s not perfect. But, for a producer looking for some basic coverage against falling milk prices or rising feed costs, it does the trick – especially when you consider it comes at an affordable premium cost of 15 cents per hundredweight for the $9.50-margin Tier 1 coverage.”

The “Hidden Cost” Crisis

The primary criticism of the current DMC is its simplicity. Grant Grinstead with Vir-Clar Farms in Wis., says the DMC formula doesn’t account for modern cost factors.

“There are so many other cost factors that come into play now versus just feed,” he says. “I think we’re still missing some of that for true risk protection ... it makes us look like we’re doing better than we are.”

“The additives, minerals and fuel costs — those costs play a role,” Munch adds.

Beyond inputs, there is the massive, uncounted elephant in the room: labor. In fact, since 2016, the cost of keeping a reliable team on the ground has surged by 30% to 50%, driven by a tightening rural workforce and rising cost of living. This especially holds true for farms in states that have mandated overtime laws for dairy employees.

As dairy operations scale, labor has moved from a minor line item to one of the largest expenses on the balance sheet. Because DMC only looks at feed, a producer can be losing money on every gallon of milk due to labor and fuel, yet USDA data will show they are operating in a “healthy” margin.

Industry leaders are now “ringing the bell” for a formula enhancement. Suggestions include a “floor” for feed costs to protect those who grow their own crops or the inclusion of a “total cost of production” index that accounts for the reality of additives, minerals and human capital.

The Rise of Dairy Revenue Protection

As the DMC program struggles with its rigid formula, producers are shifting to a more surgical tool: DRP. Launched by the USDA Risk Management Agency in 2018, the program covered nearly 30% of all U.S. milk production in 2025.

Unlike the DMC, which focuses on the margin, DRP is designed to insure against unexpected declines in quarterly revenue. It is a “fluid” policy — markets change daily, and the coverage can be adjusted to match. For the lifetime of the program through 2025, net indemnities to producers have totaled more than $850 million, proving its effectiveness in a volatile market. Through the first three quarters in 2025, the program paid out a net of $31 million, but according to Phil Plourd, president of Ever.Ag, that number will go up considerably once Q4 figures land, estimated at an additional $150 million.

Ken McCarty, co-owner of McCarty Family Farms in Rexford, Kan., says that in their experience DMC is less applicable to a farm of their size compared to DRP.

“We believe that it is important that all safety net programs are kept nimble enough to adjust to changing market dynamics and the evolution of the dairy industry,” he says.

Grinstead views risk management as a way to provide control points for the business, ensuring the farm survives the future. Since 2019, Grinstead has utilized DRP as a net-positive tool for Vir-Clar Farms, managing his strategy at least a year in advance to secure incremental margins. After experiencing a significant premium loss during the COVID-19 pandemic, he shifted to combining DRP with options to protect his financial downside while still participating in potential market rallies.

“We’re not looking for home runs,” he shares. “We’re looking for base hits and just kind of driving our business through some control points and being here for the next generation tomorrow.”

5 Pillars of the Dairy Revenue Protection Strategy

For producers, DRP offers five advantages DMC cannot match:

1. Class vs. Component Pricing. DRP allows producers to choose how their milk is valued. Class pricing (Class III and IV) is ideal for those focused on fluid volume. However, for the rising number of Jersey and high-component herds, component pricing is a game-changer. It allows producers to establish an insured price based on butterfat, protein and other solids.

2. Flexible Coverage Levels. Producers aren’t locked into a “one-size-fits-all” tier. They can cover up to 100% of their expected production at levels between 80% and 95%. This allows a producer to “buy what they need” based on their specific break-even points.

3. State-Level Indexing. DRP is not a national average; it is indexed to the state or region where the producer is located. This accounts for regional basis and production fluctuations, making the indemnity much more accurate to the producer’s actual loss.

4. Natural Market Protection. DRP is a pure market tool. It covers revenue loss caused by natural occurrences in market prices and yields. While it doesn’t cover the death of cattle or management errors, it provides a “floor” that allows a producer to keep doing business even when the global market turns sour.

5. The 2026 Evolution. The program is not stagnant. For the 2026 crop year, several key revisions are being implemented to protect the integrity of the program and the producer. This includes a new “Insured’s Certification Against Subsidy Capture,” ensuring the program remains a legitimate insurance tool rather than a speculative one. Most importantly for herd health, the 2026 revisions include language that considers animal disease a “natural disaster” event that can trigger coverage if it prevents a producer from marketing milk.

“We continue to see strong interest in DRP insurance, as it helps protect against falling milk prices regardless of what feed prices do,” Burgess shares. “It’s especially useful for producers with output of more than 6 million pounds annually who can’t fully cover their production with the DMC program.”

Even if a producer can cover all their milk with DMC, it is also a good idea to have a DRP policy because many times DRP allows them to lock in a higher milk price than what would be protected by DMC, she adds.

“For instance, in 2025, many DRP policies saw sizable claim payouts whereas DMC only had an 8 cent payout in December,” Burgess notes. “Both DMC and DRP are useful programs, but knowing the strengths and weaknesses of each is important to make sure you are using the right tool for the job.”

The sign-up period for the 2026 DMC is still open, but time is quickly running out. Producers have until Feb. 26 to lock in coverage, and current market conditions suggest payments can be expected throughout 2026.

One Week Remains for 2026 DMC Enrollment as Margin Pressure Builds

Wed, 18 Feb 2026 20:20:20 GMT

The sign-up period for 2026 Dairy Margin Coverage (DMC) is still open, but time is quickly running out. Producers have until Feb. 26 to lock in coverage, and current market conditions suggest payments can be expected throughout 2026.

Why DMC Matters in 2026

Milk prices have started the year on the weak side, and with more milk coming from U.S. farms, plus plenty of product available on the world market, margins are expected to stay tight for much of the year. Lower feed costs have limited some of the downside, but the gap between milk income and overall production expenses continues to be narrow.

Because of those squeezed margins, analysts say early 2026 DMC payments are likely, with estimates pointing to more than $1 per hundredweight in support from January through April, followed by smaller payments into July.

Expanded Coverage Now Available

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, reauthorized the DMC program through 2031 and made several updates intended to improve its usefulness and flexibility. The changes reflect how milk production and risk management needs have evolved, particularly for small- and mid-sized operations that rely on DMC as a foundational safety net.

These improvements include:

Higher Tier 1 coverage – Tier 1 production increase from 5 million lb. to 6 million lb., allowing more milk to be insured at the lower premium.
New production history – All operations must establish updated production histories based on the highest milk marketings from 2021, 2022 or 2023, while newer operations will use their first year of production data. Milk marketing statements or other documentation will be required.
Multiyear enrollment with discounts – Producers can lock in coverage for 2026–2031 and receive a 25% discount on premium fees.
Flexible coverage options – Multiple levels remain available, including a catastrophic option at a $100 administrative fee. USDA’s online dairy decision tool can help producers determine the best level of protection.

Your DMC Enrollment Checklist

With milk margins tightening and updated coverage options in place for 2026, producers may need to evaluate whether DMC fits into their overall risk management plans. This risk management plan is structured to provide payments when the margin between milk prices and feed costs falls below selected coverage levels and is commonly evaluated alongside tools such as Dairy Revenue Protection (DRP), Livestock Gross Margin (LGM) and futures or options strategies.

Before the enrollment deadline, producers should review the following items:

Verify Production History: Gather marketing statements from 2021, 2022 or 2023 to set your new baseline.
Evaluate Coverage Levels: Determine if the expanded 6 million lb. Tier 1 cap changes your strategy.
Compare Premium Costs: Weigh the 25% multiyear discount against your long-term cash flow goals.
Review Supplemental Tools: Consider how DMC works alongside Dairy Revenue Protection (DRP) or Livestock Gross Margin (LGM).
Assess Financial Goals: Determine how potential early-year payments fit into your 2026 budget.

How Do I Enroll in DMC?

To enroll in DMC, dairy producers must complete and submit an application to their local FSA office during the specified enrollment period, according to USDA. The application process includes providing production records and selecting the desired coverage level. Detailed enrollment instructions and deadlines are available through the local FSA office.

The 11th-Hour Trigger: December DMC Delivers the Only Payment of 2025

Mon, 02 Feb 2026 16:08:06 GMT

For the U.S. dairy producer, the 2025 calendar year was relatively stable, at least according to the Dairy Margin Coverage (DMC) program. For 11 consecutive months, the margin stayed above the $9.50 Tier I coverage level, leaving the program’s safety net untouched. But as the year drew to a close, the market finally blinked.

According to the USDA National Agricultural Statistics Service (NASS) ag prices report released Jan. 30, the December 2025 margin finally dipped to $9.42 per cwt. This 8¢ difference below the $9.50 trigger level officially established the first and only indemnity payment of the 2025 program year.

Math of the Margin

The December drop was driven by a significant softening in the all-milk price that outpaced a slight decline in feed costs. The U.S. average all-milk price for December fell 70¢ month-over-month to land at $19 per cwt.

On the other side of the ledger, total feed costs offered a small amount of relief, falling 8¢ to $9.58 per cwt. While soybean meal saw a healthy drop of nearly $19 per ton and dairy alfalfa hay fell by $5, corn was the lone outlier, rallying 12¢ to hit $4.10 per bushel.

When USDA applied the DMC formula — weighting corn, soybean meal and alfalfa hay — the resulting $9.42 margin left producers enrolled in Tier I coverage with an 8¢ per cwt payment. While the payment is modest, it is subject to a 5.7% sequestration deduction, and USDA has yet to announce a specific timeline for when these funds will hit producer bank accounts.

Stable Year in the Rearview

The fact that December provided the only payment of the year highlights how different 2025 was compared to the volatility of 2023 and 2024. For most of the year, the margin above feed cost remained healthy enough to keep the safety net from triggering. However, experts warn that this 8¢ payment shouldn’t be viewed as a fluke but rather as the canary in the coal mine for what is coming next.

Bleak Forecast for 2026

If December was a warning, the projections for the first half of 2026 are a siren. The latest price predictions updated Jan. 30 suggest a sharp economic turn is underway.

January’s margin is currently expected to plummet to $7.57 per cwt, a staggering $1.93 below the $9.50 trigger level. If this forecast holds, it will represent the lowest margin the industry has seen since August 2023. Current projections indicate margins will remain underwater, staying below the $9.50 Tier I level through at least July 2026.

While markets are famously unpredictable, the current data suggests that the quiet year of 2025 is over. The 2026 program year is shaping up to be one where the DMC program will be called upon frequently to provide much-needed liquidity to dairy operations.

The enrollment deadline for the 2026 coverage year is Feb. 26.

Your Next Read: The 2026 Dairy Outlook: Navigating Volatility, Genetics and the Beef-on-Dairy Revolution

Will Dairy Margin Coverage Deliver Payments in 2026?

Wed, 14 Jan 2026 17:21:27 GMT

With Dairy Margin Coverage (DMC) enrollment now open for 2026 , many dairy producers are asking the same question: Will the program actually pay out this year?

Based on current market conditions, analysts say the answer is yes.

Market Conditions Point to Early Payments

Weak milk prices, along with growing milk production both in the U.S. and abroad, are putting pressure on dairy margins, making it likely that DMC payments will be triggered early this year and possibly continue for several months. Analysts say these conditions make the program especially important as producers begin shaping their risk management plans.

“As we’re looking at 2026, milk prices are quite low to kick off the year,” says Katie Burgess, director of risk management at Ever.Ag. “And just based on the ample supply of milk coming off of farms, we are expecting low milk prices to continue into the foreseeable future, which will likely trigger DMC payments in the months ahead.”

Using mid-January market data, Burgess’ modeling gives producers a sense of what the first few months of 2026 could look like. Based on current pricing, the margin outlook suggests support might not be limited to just one or two months.

(Ever.Ag)

“Our model right now is showing payouts of more than $1 per hundredweight for January through April, and then some smaller payments for May through July as well,” she says.

Milk prices are at their lowest levels in quite some time, with the All-Milk price falling below $19 per cwt. Feed costs, meanwhile, remain relatively stable, helping to offset some of the pressure. But the gap between milk income and overall production costs is still tight for many operations.

Global markets are also awash in milk, with Europe and New Zealand adding to an already overwhelming supply. Burgess points to that international abundance as a major factor influencing U.S. prices

“Europe and New Zealand are creating a lot of milk,” Burgess adds. “So, we’re worried that we could lose some of our market share in the export space here in early 2026, which is another reason why prices are under so much pressure.”

Product Prices and Supply Weigh on Margins

William Loux, senior vice president of global economic affairs for the National Milk Producers Federation, says the margin outlook has become clearer in recent weeks, with market indicators also pointing toward a retroactive payment for December 2025.

“Given where dairy prices are today, I would certainly expect to see some DMC payments here through the first quarter and probably through the first half of the year,” Loux says. “ And I think it’s fairly well assured that we will have DMC payments for December’s milk.”

Loux stresses that while DMC is doing what it was designed to do, it’s never ideal to rely on safety net programs.

“It’s good that DMC is paying out, but it’s almost always better for prices, and better for dairy farmers, if they don’t,” he adds.

Butter and cheese prices continue to play an outsized role in shaping the milk price outlook. Because these commodities are major drivers of Class III and Class IV prices, prolonged weakness in either market pulls down the overall milk price and makes it harder for margins to improve, even if feed costs stay relatively manageable.

“Butter continues to drop and hit $1.30 today, cheese dropped below $1.30,” Loux says. “Those are the products that have the biggest influence on the milk check at the end of the day.”

Part of the challenge is on the demand side, particularly for cheese. While retail sales remain “pretty good,” Loux notes cheese is heavily dependent on foodservice.

“Cheese is one of those products that does better at food service than it does at home,” he says. “Your typical meal out to eat, especially in a fast food restaurant, is going to have more cheese on it than your average meal at home.”

With consumers pulling back on away‑from‑home spending, that softer foodservice demand is feeding directly into weaker cheese prices and a lower Class III milk price.

Butter is facing a different set of pressures. Rapid growth in butterfat tests has pushed more fat into the system, requiring the U.S. to move more butter and butterfat products into export channels. And until those export markets fully develop, that added supply is keeping a lid on butter prices.

Enrollment Now Open with Expanded Options

With margin pressure already emerging early in the year, producers now have the opportunity to enroll in the 2026 DMC coverage year. U.S. Secretary of Agriculture Brooke Rollins announced yesterday that enrollment for the DMC program will run from Jan. 12 through Feb. 26.

Signed into law on July 4, 2025, the One Big Beautiful Bill Act reauthorized DMC through 2031 and introduced several changes aimed at strengthening the program’s value. One of the biggest changes made gives producers more flexibility in how much of their milk can be protected at the lower Tier 1 premium.

“The most notable change for 2026 is that now producers will be able to enroll six million pounds at Tier 1, versus historically it’s been five million,” Burgess says. “So, it gives you an extra million pounds of coverage, especially for those medium-sized farms that could cover a lot of their milk, but not all of it.”

All operations enrolling in DMC for 2026 must establish a new production history. Existing dairies will base that history on the highest milk marketings from 2021, 2022 or 2023, while newer operations will use their first year of production data, even if incomplete.

Producers also have the option to lock in coverage for six years, from 2026 through 2031, and receive a 25% discount on premium fees. Coverage options remain flexible, including a catastrophic level available for the $100 administrative fee.

Incorporating DMC into Your Risk Management Toolbox

As producers begin to layout out their risk managment plans, Burgess says DMC remains one of the most cost-effective tools available.

“For that 15¢ a hundredweight it costs to enroll Tier 1 volume, it is the best risk management coverage you can buy right now,” she says. “For small or medium-sized farms, it’s meaningful coverage, and even for large farms, it’s at least one thing you can do to protect yourself.”

Still, both Burgess and Loux emphasize DMC works best when paired with other risk management tools. Loux encourages producers to consider Dairy Revenue Protection, Livestock Gross Margin or futures and options strategies alongside DMC.

“The uncertainty in dairy markets is not going away anytime soon,” Loux says. “So DMC, DRP — these are great programs to utilize.”

With enrollment open, milk prices under pressure and expanded coverage rules in place, DMC is positioned to play a big role in protecting dairy margins in 2026.

DMC Enrollment Opens for 2026, Now with Expanded Coverage

Tue, 13 Jan 2026 20:25:22 GMT

At a glance:

DMC enrollment for the 2026 coverage year opens Jan. 12 and runs through Feb. 26.
Tier 1 coverage expands from 5 million to 6 million pounds under OBBBA.
All producers will establish a new production history using more recent milk marketings.
Producers can lock in coverage from 2026 through 2031 with a 25% premium discount.

Dairy farmers will soon have the opportunity to enroll in an expanded and reauthorized Dairy Margin Coverage (DMC) program, following improvements included in the One Big Beautiful Bill Act (OBBBA).

During the 107^th American Farm Bureau Federation Convention, U.S. Secretary of Agriculture Brooke Rollins announced enrollment for the 2026 DMC coverage year will open Jan. 12 and run through Feb. 26. DMC remains a key safety net program designed to help offset the gap between milk prices and feed costs during periods of financial stress.

Signed into law by President Donald Trump on July 4, 2025, OBBBA reauthorized DMC through 2031 and introduced several significant changes aimed at strengthening the program’s value for dairy producers.

Higher Tier 1 Coverage

One of the most notable updates is the expansion of Tier 1 coverage. Under OBBBA, the Tier 1 production threshold increases from 5 million pounds to 6 million pounds of milk. This change allows more production to qualify for lower premium rates, improving affordability and risk protection for small- and mid-sized dairy operations.

New Production History Established

All dairy operations that enroll in DMC for the 2026 coverage year will establish a new production history.

For existing operations that began marketing milk on or before Jan. 1, 2023, production history will be based on the highest milk marketings from 2021, 2022 or 2023. New dairy operations that started after Jan. 1, 2023, will use their first year of monthly milk marketings, even if that year is incomplete.

Producers will be required to provide milk marketing statements or other acceptable production evidence to establish their production history.

Multiyear Enrollment Option with Discounted Premiums

OBBBA also introduces a long-term enrollment option. Dairy operations can choose to lock in DMC coverage levels for six years, covering 2026 through 2031. Producers who select this option will receive a 25% discount on premium fees, offering additional cost savings and predictability.

Coverage Options Remain Flexible

DMC continues to offer multiple coverage levels, including a catastrophic option that is available at no cost beyond the $100 administrative fee. Producers can select coverage levels that best align with their risk tolerance and financial goals.

To help evaluate coverage options, producers are encouraged to use USDA’s online dairy decision tool, which allows operations to compare scenarios and determine the most appropriate level of protection.

With higher Tier 1 coverage, discounted premiums for long-term participation and updated production history rules, the changes under OBBBA are expected to enhance DMC’s role as a risk management tool as producers plan for the years ahead.

Dairy Margin Coverage Snapshot for 2023 Delivers Big

Wed, 27 Sep 2023 13:16:00 GMT

The Dairy Margin Coverage (DMC) calculators have been nonstop in 2023. In July, the DMC hit its lowest level since the program began in 2019. Zach Myers with Maryland & Virginia Milk Producers gave an update on the overall snapshot of the DMC program in 2023 at the Dairy Financial and Risk Management Conference in Harrisburg, Pa.

Myers shared that more than 17,000 dairies enrolled in the program in 2023, representing 61% of the U.S. dairies. Other statistics he shared included:

156.20 billion pounds of milk enrolled
$1.128 billion in indemnities
$66,355 per enrolled dairy

The Rest of 2023?

(DMC Decision Tool, 9/11/23)

2023 DMC Theoretical Net Benefit

Myers shared that the hypothetical net total benefit from DMC could add up to a big revenue line.

Possible benefit for 2023 per 1 million pounds at the $9.50 level - $25,265.47
Possible benefit for 2023 per 5 million pounds at the $9.50 level - $126,327.37

“December could be the only month that doesn’t pay an indemnity payment in 2023,” Myers said.

Dairy Revenue Protection

While DMC allows producers to select a milk price and average feed cost difference to determine at which they receive assistance, Dairy Revenue Protection (DRP) is designed to insure against unexpected declines in the quarterly revenue from milk sales relative to a guaranteed coverage level. The expected revenue is based on futures prices for milk and dairy commodities, and the amount of covered milk production selected by the dairy producer. The covered milk production is indexed to the state or region where the dairy producer is located.

Above is an example of what DRP looks like as of Sept. 11th at 95% coverage.

“In general, the further out you get the more expensive the policies become because there’s more risk associated with those policies,” Myers said. “Of course, the goal is to protect your production cost.”

“As prices rebound and jump back up above that five-year minimum cost of production, these premiums aren’t necessarily cheap out here, but consider that net that it gives you and then factor your cost of production is very important,” Myers said.

As producers ride out the volatile dairy economy, one big reason that has helped many manage last year is because of the DMC and DRP risk management programs.

DMC Payments Hit Mailboxes Once Again – Here’s What Amount to Expect

Fri, 01 Sep 2023 20:22:17 GMT

Producers have been wired to head to the mailbox this calendar year, as Dairy Margin Coverage (DMC) payments have been triggered due to a stretch of low milk income. As expected, another round of DDMC payments will hit producer’s mailboxes soon.

At just $3.52 per cwt., the July DMC margin triggers Tier I indemnity payments at all coverage levels, from the catastrophic price floor of $4 per cwt. to the maximum coverage level of $9.50 per cwt. The top payment is $5.98 per cwt. at the maximum $9.50 coverage level.

According to Erick Metzger, general manager of National All Jerseys, milk protected at the $9.50/cwt. level will realize indemnity payments for more than $4,461 for each 1 million pounds enrolled. The year-to-date payments totaled nearly $21,242 per 1 million pounds covered at the maximum level.

Phil Plourd, president of Ever.ag Insights, says producers are also reminded to utilize risk management tools like Dairy Revenue Protection (DRP).

“These are also times that remind us that risk management requires vigilance and diligence. I don’t think many folks had margins sinking this low in 2023. Yet here we are,” he says.

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.

However, the milk income margin shows signs of improvement in the August DMC calculations that will be announced at the end of September. As of the close of futures trading on the Chicago Mercantile Exchange on Aug. 31, the DMC decision tool forecasts an August margin of $5.66 per cwt.

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,” Mulhern says.

Market Analyst Offers Insights into Dairy

Tue, 15 Aug 2023 15:28:29 GMT

Dairy producers have felt the whiplash milk prices have delivered, swinging from record highs last spring to extreme lows this summer which was caused by a combination of events.

Alyssa Badger, vice president of global operations at insights at HighGround Dairy, shared with AgriTalk’s host, Chip Flory, that stronger than expected global milk production growth, specifically in the U.S. due to high prices and bearish demand, has reflected on 2023’s milk checks.

“Here we are in 2023 and trying to remove those cows as quickly as possible,” she says, stating that the reduction in cow numbers that we are seeing in 2023 is with cows being sent to slaughter.

Badger has a background with risk management as well as working closely with New Zealand dairy company’s HighGround.

“We’re expecting production basically to remain negative through the end of the year and into the beginning of 2024,” she says. “That should start to balance things pretty quickly.”

According to Badger, the reasons behind high cull cow numbers is due to high beef costs, high labor costs and some drought.

“Income-over-feed for some farms is the worst that they’ve seen since 2012,” she shares. “And, there are some farmers that are experiencing the worst margins since 2009.”

Milk was No. 2 Commodity Purchased with Snap Dollars During COVID

Badger believes that we have hit bottom in terms of milk prices and that things will only improve from here. However, she shares that fluid milk consumption has been on a downward trend in the U.S. since 2018. During the pandemic when SNAP benefits were given out in record to help consumers buy groceries for nearly three years, many of them were using those dollars to purchase milk. Badger states that milk was the No. 2 commodity purchased with that SNAP money.

From another angle, Badger shares that students starting to repay student loans would impact consumption, as it would impact those eating away from home.

“More than anything, it would impact dining out which is you know, pretty decent consumption from a butter perspective, but also a bit of cheese,” she says. “I think the spending primarily impacts restaurant traffic more than anything, and that they’ll just be buying more at the grocery level. It will certainly slow the consumption of butter quite a bit.”

Risk Management Coverage for the First Half of 2024

With milk futures showing promise from where they have been, Badger says now is a time to keep an eye on the futures for both milk and feed.

“On the milk product and milk pricing side, milk production is tightening up. But as we mentioned, if the U.S. is going to fall into recession later this year, milk prices could still kind of remain pretty soft. We’ve also been advising on some flexible coverage options. I think more than anything, we’re also going to be buyers of Q1 and Q2 DRP.”

To listen to the entire conversation between Badger and Flory on AgriTalk, go to AgriTalk-August 8, 2023 PM - AgriTalk PM - Omny.fm

Better Days are Ahead

Thu, 03 Aug 2023 14:37:56 GMT

Bad times don’t last forever. Neither do good days. The mood of the industry quickly changed from an upbeat tone in 2022 to a sad melancholy note this summer.

A female entrepreneur, Jenni Young, says, “Every situation in life is temporary. So, when life is good, make sure you enjoyed and receive it fully. And when life isn’t so good, remember that it will not last forever and better days are on the way.”

Truer words haven’t been spoken.

Earlier this summer, our farm in northwest Illinois was in a major drought. We went more than six weeks without any rain and as my family and I headed out of town the end of June, we wondered if we would have enough feed to feed our cattle this fall. We were playing out all the worst-case scenarios in our heads. “Plan for the worst and hope for the best.”

And we prayed. A lot.

We returned from our trip four days later just in time to lose power after a storm brought us two inches of rain. I was never happier to not have power than to receive much-needed moisture. In return, our crops thanked us and showed quick signs of improvement. More rain followed over the next week and two weeks after our trip, we were reminded that patience, prayer and time really play a factor.

This is something I reminded my husband of when he opened up the July advance check. It was sobering, to say the least. A drastic change from the near-record high prices that last summer’s milk checks cashed out. We are reminded again that we must remain patient and give it time and pray hard for milk prices to rebound.

This is easier said than done, as low milk prices challenge us to pay the bills. And while the Dairy Margin Coverage (DMC) checks have been welcomed, they don’t stretch as far as we need them to. Personally, we are thankful for Dairy Revenue Protection (DRP) coverage, but again, the high inputs quickly swallow up any extra cash.

As summer fades away, I want to remind you all that we are all in this together. Be patient. Cling to hope. Better days are on the horizon.

June’s Dairy Margin Coverage Payment Sets a New Record

Mon, 31 Jul 2023 16:42:47 GMT

As predicted, a very large Dairy Margin Coverage (DMC) payment is coming to producer’s mailboxes. In fact, June’s DMC income over feed cost calculation set a new record low at just $3.65/cwt. Milk covered at the $9.50 level will realize an indemnity payment of $4,366.09 for each million pounds enrolled. This is down $1.18/cwt from May’s previous record low.

Premium alfalfa hay fell $7 per ton to $310, and corn slipped $0.05 per bushel to $6.49. Soybean meal dropped $10.12 per ton to $413.46, making feed costs $14.25/cwt, down $0.22.

The margin above feed cost is down $1.18/cwt from May’s previous record low. This is the lowest milk income margin level since the inception of the DMC program and its predecessor, the Margin Protection Program for Dairy (MPP-Dairy). Year-to-date payments total $16,780 per one million pounds covered at the maximum level.

Phil Plourd, president of Ever.ag Insights, says producers are also reminded to utilize risk management tools like Dairy Revenue Protection (DRP).

“These are times that remind us that risk management requires vigilance and diligence. I don’t think many folks had margins sinking this low in 2023. Yet here we are,” he says.

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,” Mulhern says.

The Cost of a Farm Bill: 2023 Dairy Priorities

Wed, 08 Feb 2023 20:17:24 GMT

The 2018 farm bill was stamped with a $428 billion price tag when the bill was passed. Nutrition, crop insurance, commodities, trade and conservation programs were among the programs to receive the most funds.

With the bill set to expire on Sept. 30, the Congressional Research Service last May released baseline spending for the same programs starting in the 2023 farm bill. The baseline shows a decrease in commodities and conservation, while nutrition, trade and crop insurance increased.

As the debate heats up, here’s a breakdown of what National Milk Producers Federation (NMPF) looks to push on the 2023 farm bill negotiating table:

1. Dairy margin coverage (DMC)

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.

Read more: USDA Confirms Farmers’ Fears: Net Farm and Net Cash Farm Income Expected to Fall This Year

NMPF is also spotlighting DMC’s payout equation.

USDA requires DMC participants to establish a historical milk production base, or production history, from 2011 to 2013, which is then used to calculate funding. But this data is too outdated to get a realistic estimate, according to Paul Bleiberg, NMPF senior vice president of government relations.

“Congress enacted a supplemental program a couple of years ago that gets producers up to 2019 production history levels,” he says. “At a minimum, we want to see that program folded into the underlying DMC safety net.”

With the farm safety net in focus, NMPF is looking to maintain momentum in other dairy price support arenas.

2. Dairy Revenue Protection (Dairy-RP) Program and the Livestock Gross Margin (LGM) for Dairy Program

While crop farmers have had access to risk management tools for decades, Bleiberg says dairy producers weren’t offered the same level of opportunities until the 2018 farm bill.

Moving into 2023, Bleiberg says members are satisfied with the 2018 offerings in Dairy-RP and LGM-Dairy , and his team has assumed a “do no harm” stance.

“We now have a safety that is more affordable and offers higher coverage than in the past, with open access for farms of all sizes,” Bleiberg says. “With these tools [Dairy-RP and LGM] in hand, we want to preserve where we are at right now, at a minimum.”

Read more: USDA’s New School Meal Proposal Keeps Low-Fat Flavored Milk on the Menu

While NMPF plans to maintain price protections, it says it’s hitting the gas on conservation.

3. Conservation

The Inflation Reduction Act (IRA) of 2022 provides $20 billion in funding for USDA’s conservation programs, including $8.45 billion for Environmental Quality Incentives Programs .

According to Mulhern, NMPF “pushed hard” for conservation in the IRA, and they would like to see more in the coming farm bill through feed and manure management.

“Management practices, along with improving water quality and use, can help us fulfill carbon neutral by 2050. These programs aren’t always targeted toward what we think are the most impactful areas for dairy, but we’ll use every big toolbox tool we’re given,” Mulhern says.

How many conservation changes will be needed in the farm bill, Bleiberg isn’t sure. He says NMPF’s tactic is to emphasize climate-smart ag and any other funding that could “prove helpful” to the dairy industry.

Next Farm Bill: 500-Foot Viewpoint a Must for Dairy

Thu, 27 Oct 2022 14:00:00 GMT

Every five years. After going through an extensive process of being discussed and debated before being passed by Congress and then signed into law, this is how often a Farm Bill is updated. The current Farm Bill is set to expire in 2023, and Scott Brown, a dairy economist with the University of Missouri, says that he hears a lot of the 30,000-foot view of what needs to be done policy-wise, but he doesn’t hear the 500-foot view.

“Until we get to the 500-foot view, we won’t get a 2023 Farm Bill written,” he says.

Brown applauds the Dairy Margin Coverage (DMC) program, saying it is much better than the original Margin Protection Program (MPP.)

“It still caps us at $5 million lbs., so for a lot of larger producers, it’s not that great of a risk management tool,” he says.

However, he still says DMC is an inexpensive and easy risk management tool and most didn’t initially think DMC would trigger any payments. In fact, an August indemnity payment was triggered due to rising feed costs.

The Missouri dairy economist says that getting something changed in the next Farm Bill takes a lot of effort and a lot of numbers.

“There’s a lot of members of Congress who might shy away from wanting to be engaged,” Brown says.

Mike North with ever.ag simply states that dairy policy is complicated.

“Especially with the House side finding members that understand or have that dairy background, there isn’t very many, and so they’re going to shy away from too much in the weeds, which just means we need to provide them with better information, the industry coming together,” he says.

North says that he has only seen one Farm Bill actually written on time in his entire career.

“The odds are we’re not getting it on time,” he shares.

Factor in federal orders, depooling and make allowances, North says these are all big discussions that will require the dairy industry coming together to make their voices clearly heard in Washington and to state what they want in the new Farm Bill.

“Otherwise, it’s going to be just another stamp and move on, and we’ll keep it the way it was,” he says.

Dan Basse with AgResource Company concurs with North and says it is essential to have both the processing industry and dairy farmer voices heard.

“That’s what makes the Central Market order so difficult,” he says.

With the industry now driven by components, Basse says the industry doesn’t want to transport water anymore.

“We all want to transport components and our federal orders are not structured that way,” he says. “But they’re so complex that when I try to talk to someone in Congress, they get a headache, they don’t understand.”

The current Farm Bill was signed into law in 2018 and is due to expire in September 2023. While that may still seem a long way away, unity in the dairy industry to create a 500-foot view will be essential in spelling success for dairy with the next Farm Bill.

Risk Management: A Critical Ingredient to Spell Success

Tue, 03 May 2022 11:52:05 GMT

Craig Caballero believes risk management is a much-needed discussion and a much-needed ingredient to help manage his 5,200-cow dairy in Elroy, Ariz.

Since 2007, Caballero has utilized risk management and says he could not imagine dairying without it, especially with all the volatility in the market and world right now.

“Risk management is a tool that we use every single day,” he says. “It’s part of what we do, and I personally could not imagine in the volatility that we live in, not participating in some kind of a plan.”

With milk prices far exceeding $20, Phil Plourd with ever.ag says that participation in Dairy Revenue Protection (DRP) in the first half of 2022 has mixed results.

“On volume booked in the first quarter, effective volume was slightly down from 17 billion lbs. versus 20.6 billion lbs. last year,” he says.

However, Plourd reports that the volume of coverage in place for the first half of 2022 is actually up from 27.6 billion lbs. versus 35.4 billion lbs. year-over-year.

“Producers are definitely using the tool in healthy numbers,” he reports.

According to Plourd, given all the volatility we have seen, DRP premiums are higher and that can work against participation.

“The fact is that today, dairy producers have the opportunity to establish Class III trigger price thresholds for the third and fourth quarter at levels near or topping the highest levels we’ve ever seen for those time frames,” Plourd says. “That’s got a powerful appeal.”

He says this is especially true when considering all the uncertainty on the cost side of the equation.

“DRP allows producers to protect something near-record income levels, taking disaster off the table, while leaving the upside open just in case markets keep going higher,” he says.

Plourd states that more than ever, a disciplined approach to risk management is critical.

“There’s so much uncertainty swirling on both the income and cost sides of the ledger,” he says. “It’s great to see Class III milk futures trading at $24. But in our estimation, that’s a reason to be proactive about risk management, not complacent – whether that means DRP or some other strategy.”

Caballero believes protecting both sides of the ledger is needed to help manage his dairy.

“I wouldn’t call it risk management if you’re not handling both sides of the ledger,” Caballero says. “It’s more like speculating.”

A Fountain of Hope: Dairy Farmers Address 2022 with an Optimistic Set of Lens

Fri, 21 Jan 2022 18:00:00 GMT

Despite having endured razor-thin margins over the past few years, the spike in milk prices has spurred optimism for some dairy farmers in the year ahead. A lot has happened since 2014, the last time dairy farmers opened $20 plus milk checks. Two dairy producers on opposite sides of the country talk about the challenges that face them, how technology will play a role in the future and what excites them about the future of dairy.

Seventh-generation dairy farmer, Joanna Shipp, who owns and operates Bowmont Dairy Farm Inc., home to 200 milk cows in partnership with her father in Boones Mill, Va., says that the last few years of the pandemic has taught her to learn to be prepared to pivot.

“I’m trying to not get ahead of myself,” she says. “We will make our best-educated guess on expenses based on past experience and prediction from experts.”

Nearly 3,000 miles away in Chehalis, Wash., dairy farmer, Michelle Schilter says the pandemic surfaced so much for her family and farm and she appreciates all the extra time she had with her children. “Our family was able to reconnect, eat meals together and work side by side while the world was experiencing absolute chaos day after day,” she shares.

Unsure how the pandemic impacts their future, Schilter says that like most dairy farmers, they were busy running a dairy during the pandemic. Her and her husband, Lonny, own Sun Ton Farms in partnership with his parents, Anton and Sunny Schilter, where they milk 240 cows. They ship their milk to Northwest Dairy Association and have been certified organic since 2006.

Labor and Supply Chain Headaches

The number one challenge both producers face is the lack of labor. “The labor pool is tight,” Shipp notes. “Many people are looking for flexible work schedules. A large part of my time is putting together coverage from an employee pool of part-time workers, and I don’t think that is going to change drastically over the next year.”

Schilter concurs about the constant labor struggle and shares that the lack of labor stems from competition with other industries, like construction. Coupled with the new overtime rule employed by the state of Washington, Schilter says that this is easily their number one challenge.

Another headache felt by both producers is the supply chain shortages. “It affects our ability to purchase supplies we need for day-to-day operations,” Schilter says. “It has been so frustrating the amount of time it takes to get parts and supplies for necessary repairs within our farm operation.”

Shipp, who ships their milk to Maryland and Virginia Milk Cooperative Producers is optimistic about the rise in milk price. However, she is concerned that higher inputs may eat up any margin. “We can listen to forecasts and predictions, but we are unsure where they actually will end up,” she notes.

Opportunity on the Horizon

In Virginia, Shipp focuses on capitalizing on continuous improvements made to her family farm. She returned to the farm 10 years ago and over that time the family has made small, but important changes to animal care, dairy protocols and milk quality. Shipp shares that those improvements have helped them keep going through the last few years. “With the current milk price projections, we are poised to reap the benefits of the improvements we have made over the last 10 years,” she shares.

With the decision to install a robotic milking system, excitement is brewing for the Schilter family. “Given our location in western Washington and the ability to maintain our family farm for the next generation, we decided to go robotic,” she says.

The decision to go robotic was essential for the Schilter family to transfer the farm to the next generation. They plan to incorporate more than just a robotic milking system into their farm. “As technology and equipment evolve and become more affordable, we will continue to look for ways to streamline and incorporate this kind of technology on our farm,” she says.

Robotic milking has been a consideration that Shipp has put on hold for several years. They currently milk in a parlor that was built by Shipp’s grandfather in 1972. The family started to plan for a new barn and robots, but the family pushed pause due to the status of the dairy economy in 2017. “I hope that a positive milk price through 2022 will allow me to resume that project,” she shares.

Shipp hopes that the robotic milking technology will help her get over the labor hurdle and allow her farm to strive for efficiency.

Risk Management Factors In

After experiencing a string of years of uncertainty, both producers say that they will continue to utilize risk management tools to help minimize uncertainty. Shipps says that Dairy Margin Coverage (DMC) has greatly helped and states they contract feed when they can. “We also buy local and work with our neighbors which helps to minimize risks,” she adds.

Out west, Schilter takes advantage of risk management tools like the Margin Protection Program (MPP), which she shares, “has been a useful tool for our farm, especially given the past few years in our industry.”

Overall Optimism

Overall, both producers are optimistic about the year ahead for the dairy industry. “I’m trying to not let the challenges I face cloud all of the positive things that are happening in the wider dairy community,” Shipp says. “History shows the ups and downs of dairy farming, and I plan to celebrate 200 years of farming at Bowmont Dairy Farm.”

Out west, Schilter wholeheartedly agrees and says that she sees a huge opportunity for dairy farms. “Given where we live in western Washington, our farm provides a great opportunity for consumers to see how their favorite dairy products are produced,” she notes. “From watching cows out on pasture during the summer to our transition to a robotic milking system, consumers can see the dynamic and exciting things happening in agriculture.”

The old question — is the glass half full or half empty isn’t a puzzle for these two dairy producers. While challenges have certainly filled their cup the last several years, the producers cling to optimism that is fueled by technology, allowing their family farms to be passed onto the next generation down the road.

USDA Offers Temporary Changes To DMC Intergenerational Transfer Rule

Fri, 20 Nov 2020 03:03:59 GMT

If a spouse, child or grandchild has joined your operation, you may be eligible for an increase in your Dairy Margin Coverage (DMC) production history.

If the spouse, child or grandchild joined the operation since 2014 and additional dairy cattle were added to your herd, your DMC history can be updated to reflect that increased milk production, reports Dairy Famers of America. The cattle must have been purchased within 120 days of the family member joining the operation. The production history can be increased up to 5 million pounds.

For those farms that were in enrolled in the dairy Margin Protection Program from 2014 through 2018, the production history may be applied to the DMC 2019 calendar year. Operations who make this adjustment may be eligible for additional payments this year.

Operations have until December 13, 2019 to update their production histories to reflect the intergenerational transfers. Do so at your local Farm Service Agency office.

You can also enroll for 2020 DMC coverage through December 13, 2019.

Dairy Safety Net Program Expected in June

Fri, 20 Nov 2020 02:07:07 GMT

An insurance program to help hard-pressed dairy farmers is expected to be ready for enrollment in June, the U.S. Farm Service Agency says, but farmers say it won’t tackle the underlying challenges they face.

Dairy farmers are in their fifth year of low milk prices that have driven thousands out of business.

“I’ve been in this for over 40 years and this is as bad as it’s ever gotten,” said Vermont dairy farmer Jacques Parent on Tuesday.

Describing the dairy farmers’ situation as urgent, 38 U.S. senators signed a letter late last month urging the U.S. Department of Agriculture to implement the insurance program quickly and work to educate farmers about their options.

The improved insurance program in the 2018 farm bill — called Dairy Margin Coverage — expands the coverage levels for farmers. They pay premiums and receive payments when the gap between milk prices and feed prices reach a certain level. The program was delayed by the 35-day partial government shutdown. Payments will be retroactive to January.

“USDA is working diligently to implement the DMC program and other programs authorized by the 2018 Farm Bill,” FSA Administrator Richard Fordyce wrote in an email on Monday.

Still, the more time that passes, the harder it is for farmers.

“I think it’s frustrating, very frustrating because we’ve gone through this four-year drought in revenue and each month it gets put off the more disheartened producers become,” said Michigan dairy farmer Ken Nobis.

Consumer demand in some segments and unresolved trade issues that are harming exports and boosting surpluses are other issues challenging the dairy industry, a spokesman for the National Milk Producers Federation has said.

For many years, dairy farmers went through a three-year cycle of a good year, a bad year and a mediocre year, Nobis said.

“Now we’re in our fifth year of below profitable levels of milk production, that’s pretty hard for anyone to withstand,” he said.

Higher tier coverage is available for smaller operations. Nobis, whose farm milks 1,000 cows, and Parent with 700 cows, would cap out early.

“It’s appreciated but it’s only a little Band Aid,” said Parent.

The bottom line is farmers don’t want a check from the government, said Nobis. “What we want is a viable market and that viable market ... has been damaged dramatically by the trade issues that we didn’t ask for, frankly.”

Dairy Forward Pricing Program Expires

Fri, 20 Nov 2020 02:00:04 GMT

As of October 1, Congress has failed to pass the 2018 farm bill or legislation that would extend the Dairy Forward Pricing Program. Under that program, proprietary plants who offered forward pricing were not required to pay minimum Federal Order prices.

Because the program expired without any authorizing extension, “proprietary handlers establishing new forward contracts on or after October 1, 2018 will not be exempt from paying minimum Federal order prices,” says Vic Halverson, Administrator for the Upper Midwest Federal Milk Marketing Order. “Previously established contracts that expire on or before September 30, 2021, are not impacted.

“With the expiration of the Forward Pricing Program, all producers may still choose to (but are not required to) have forward pricing contracts,” he says. “For producers being paid by proprietary plants, however, such contracts do not exempt the proprietary plant from its obligation to pay the producer the Federal order minimum prices on milk pooled on the order.”

Don’t Miss 2020 Dairy Margin Coverage Program Enrollment

Thu, 12 Nov 2020 05:56:12 GMT

Enrollment for the 2020 Dairy Margin Coverage program ends December 13.

While the prospects for higher milk prices next year appear promising, analysts agree anything can happen.

“Dairy producers should definitely consider coverage for 2020 as even the slightest drop in margin can trigger payments,” says Bill Northey, USDA Under Secretary for Farm Production and Conservation. “Dairy producers should consider enrolling in DMC to guard against what has been, for several years, an extremely unforgiving market.”

In 2019, USDA has paid farmers more than $300 million in DMC payments.

The 2020 DMC enrollment reported by individual states as of November 25, 2019 shows 4,015 or 14.84% of the 27,059 dairy farms with established production history are enrolled in the program.

For those who haven’t enrolled, USDA’s DMC decision tool was designed in partnership with the university of Wisconsin to help producers determine the level of coverage under a variety of conditions that will provide them with the strongest financial safety net. Use the decision tool, here .

To learn more about the program and to enroll, visit your local FSA office or click here .

RELATED CONTENT:

2020 Dairy Margin Coverage Enrollment Now Open

What You Need To Know About The Dairy Margin Coverage Program

Dairy Margin Coverage Program FAQs

Dep. Secretary of Ag: ‘Sign up for Dairy Margin Coverage Program’

Thu, 12 Nov 2020 05:55:04 GMT

Many dairy farmers still haven’t signed up for the Dairy Margin Coverage Program. U.S. Deputy Secretary of Agriculture Steve Censky urged dairy farmers to register for the improved program at the Ag Outlook Forum on Sept. 23 in Kansas City, Mo. He described the new Dairy Margin Protection Program (DMC) as much improved over the old program offered by the farm bill.

“That’s one of the things that can actually put money in dairy farmers’ pockets,” he says. “[Congressman] Collin Peterson has said if a dairy farmer hasn’t signed up for the program, they’re out of their mind.”

Censky also acknowledged that DMC is only one piece of a solution for dairy farmers.

“Dairy farmers we recognize have been suffering and have been probably harder hit than almost any other sector,” he says.

Censky also sees promise in increased market access, especially in countries like Mexico, the largest export market for dairy products.

“I think it was positive when the retaliatory tariffs on steel and aluminum were removed, so that we could regain that market and our exports were not affected by Mexico’s countermeasures there,” he says.

Censky also points to the trade agreement with Japan as a potential bright spot. “I think the upcoming announcement for the Japan agreement is very positive for dairy as well, and it will really improve our market access to the Japanese market,” he says. “Our hope is that the agreement can be implemented in the short term, starting as early as the beginning of the year.”

USDA extended the deadline for dairy farmers to enroll in DMC to Sept. 27. DMC is authorized by the 2018 Farm Bill to provide price protection when the difference between the all-milk price and average feed cost (margin) falls below a dollar amount selected by the dairy farmer.

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AFBF Unveils Dairy Revenue Protection Plan

Thu, 12 Nov 2020 05:54:26 GMT

Dairy farmers have another option for risk-management with a new insurance product being offered by American Farm Bureau Federation (AFBF).

AFBF, in cooperation with American Farm Bureau Insurance Services, developed a product called “Dairy Revenue Protection” insurance that helps dairies lock in revenue on milk sales. The product was approved by the U.S. Department of Agriculture’s Federal Crop Insurance Corporation.

“We know that the level of risk protection available to dairy farmers was inadequate and we saw a clear opportunity to help by specifically addressing the impact of milk price volatility on a dairy farmer’s revenue,” says AFBF President Zippy Duvall.

Dairy Revenue Protection is designed to provide multiple levels of insurance coverage based on the value of the farmer’s milk. Options available include one based on milk futures prices, while another option that focuses on milk components such as butter fat and protein.

“This coverage will help shield dairy farmers from unexpected declines in milk prices as well as unexpected declines in milk production by addressing overall revenue,” Duvall says. “We are excited about teaming up with American Farm Bureau Insurance Services to offer this new risk management tool to dairy farmers.”

In addition to the dairy pricing options, Dairy Revenue Protection functions similarly to area-based crop revenue protection insurance policies. The coverage would offer revenue guarantees based on futures prices, expected production and market-implied risk. The premiums for coverage will be subsidized.

AFBF expects Dairy Revenue Protection policies will be available in late summer 2018.

Dairy Forward Pricing Program Expires

Thu, 12 Nov 2020 05:53:37 GMT

Dairy Safety Net Program Expected in June

Thu, 12 Nov 2020 05:53:22 GMT

Dairy Margin Coverage Program FAQs

Thu, 12 Nov 2020 04:59:49 GMT

Many dairy producers are hopeful that the Dairy Margin Coverage (DMC) program through the 2018 Farm Bill will provide a better safety net. Below we’ve pulled together the answers to some frequently asked questions.

What is DMC? A new version of the Margin Protection Program (MPP), DMC is a voluntary program that makes payments when the national average income-over-feed-cost margin falls below a farmer-selected coverage level. ) Coverage is now available from $4 per hundredweight to as high as $9.50 per hundredweight. Unlike MPP, program payments may be triggered monthly and are made if the DMC margin falls below the farmer’s elected coverage level.

How much milk can I cover with the program? Coverage can range from 5% to 95% of a farm’s milk production history, but can only be covered in 5% increments. For example, you can cover 85%, but you couldn’t cover 87% of your production.

Can you explain Tier 1 and Tier 2 coverage? Tier 1 coverage is the first 5 million pounds of production covered by a farm. DMC coverage thresholds for tier 1 production were raised to $9.50. Coverage for Tier 2 remains capped at $8 per hundredweight, however John Newton of the American Farm Bureau Federation says the program is designed to encourage coverage at the $5 and $4.50 levels for farmers covering more than 5 million pounds of milk.

What’s this premium discount I’ve heard of? When a farm enrolls in DMC they may receive a 25% premium discount if they make a one-time election for both the coverage level and the amount of milk enrolled in the program. For example, a farmer electing the Tier 1 $9.50 coverage option would receive a 25% discount on premiums for all five coverage years – reducing the premium from 15 cents to 11.25 cents per hundredweight – if a one-time election is made.

Is this program really better than MPP? Newton pulled together these charts which compare net benefits, i.e., program payments minus premiums, from DMC $9.50 coverage to $8 coverage for both the Bipartisan Budget Act-improved MPP and the original MPP from 2015 to October 2018.

Can you explain the hay change in the feed cost calculation? The new farm bill requires USDA to begin including the price for high-quality alfalfa hay in the NASS monthly price surveys as measured by the volume of milk produced in the top five dairy-producing states. National Milk Producers Federation is urging USDA to include this price point in the DMC calculation, but this has not been finalized.

Can I participate in DMC and LGM-Dairy? Yep. The farm bill fully removes the restriction on participation in both the DMC and the Livestock Gross Margin-Dairy (LGM-Dairy) program. Don’t forget, FSA will administer DMC and the Risk Management Agency administers LGM-dairy, but USDA says the agencies are in coordination and producers should have no challenges participating in both programs.

Did I miss the sign-up window for DMC? No. Technically farmers can legally obtain coverage under the program beginning January 1, 2019. However, the government shutdown prevented farmers from enrolling as FSA offices were closed. The best thing you can do is contact your FSA representative and ask them when they will be ready to take sign ups.

USDA Issues Another $100 Million in MPP Payments, Extends Enrollment

Thu, 12 Nov 2020 04:53:46 GMT

While issuing another $100 million in back-payments for the Margin Protection Program, the USDA extended the MPP enrollment deadline to ensure dairy farmers have every opportunity to join if they want to.

On Wednesday, USDA undersecretary Bill Northey’s office told Farm Journal’s MILK another $100 million in payments have been issued to producers and that they should be seeing them very soon. That brings the total payout for the first half of 2018 to more than $192 million.

There has been some confusion at the local FSA level as to whether or not producers who requested to have their administrative fee waved would be receiving payments during the same time as the rest of those farmers enrolled. According to USDA, those producer payments are in the same pool as the others and the agency is working to get the funds to producers as quickly as possible.

Meanwhile, Agriculture Secretary Sonny Perdue announced a second extension of the enrollment deadline for the program saying he wants to give producers every opportunity to take advantage of the “new and improved” program.

“Last week we re-opened enrollment to offer producers preoccupied with field work an additional opportunity to come into their local office to sign-up. We did get more than 500 new operations enrolled but want to continue to provide an opportunity for folks to participate before the next margin is announced,” said Secretary Perdue. “More than 21,000 American dairies have gone into our 2,200 FSA offices to sign-up for 2018 MPP coverage but I am certain we can do better with this extra week and a half.”

According to USDA, the deadline is being extended a second time to ensure that dairy producers are given every opportunity to make a calculated decision and enroll in the program if they choose. Because the May 2018 margin will be published on June 28, 2018, all coverage elections on form CCC-782 and the $100 administrative fee, unless exempt, must be submitted to the County FSA Office no later than June 22, 2018.