PARTNERS

By Craig W. Anderson 

The new Dairy Margin Coverage (DMC) program – part of the 2018 Farm Bill – may not be fully available until mid-2019 but January’s margin for dairy-income-over-feed-cost triggered the first payment for eligible producers in June.

The DMC replaced the Margin Protection Program (MPP) for dairy and is a voluntary risk-management program that offers protection for dairy farmers when the difference between the all-milk price and the average feed cost – or margin – falls below a certain dollar amount selected by the producer.

“Congress created the Dairy Margin Coverage program to provide an important financial safety net for dairy producers, helping them weather shifting milk and feed prices,” said USDA Farm Service Agency administrator Richard Fordyce. “This program builds on the previous Margin Protection Program for Dairy, carrying forward many of the program upgrades made last year, based on feedback from producers.”

He added, “We’re working diligently to implement the DMC program and other FSA programs authorized by the 2018 Farm Bill.”

Ag Secretary Sonny Perdue announced that “The sign-up period for DMC will open by mid-June,” according to the website Progressive Dairyman.

University of Wisconsin dairy economists Bob Crop and Mark Stephenson clarified the upcoming payment schedule on the dairymarkets.org website: “The Dairy Margin Coverage program … likely offers the best risk protection going into 2019” and that “payments will be retroactive” when accrued on or after Jan. 1.

Peterson perplexed

House Agriculture Chair Collin Peterson said in a committee release, “I’m afraid that producers were so disappointed with the MPP – Margin Protection Program –that they won’t sign up for this new and improved program.”

Simply put – the voluntary DMC is a new version of the MPP, a program that makes payments when the national average income-over-feed-cost margin falls below a farmer-selected coverage level; unlike the previous MPP, the Dairy Margin Coverage payments may be triggered monthly.

Big Question answered

However, an important question asked by the nation’s dairy farmers – “Did I miss the sign-up window for DMC?” – can be answered with a solid “No.” Technically speaking, farmers could legally acquire DMC coverage beginning Jan. 1. But the government shutdown threw a monkey wrench into the timely unveiling of the DMC. 

Hamm reveals DMC challenges

“The shutdown delay prevented the program from being rolled out efficiently and on time,” said Jack Hamm, Lodi dairy farmer. “The 2018 Farm Bill wasn’t exactly sprinting toward completion but the government started rolling things out in February when the programs, dairy industry and dairy farmers weren’t prepared or as complete or informed as they needed to be.”

Eventually good for dairy farmers

He said when all the delays and intricacies of the DMC, Federal Milk Marketing Order and other programs are in place and their kinks ironed out, “they’ll be good for California’s dairy farmers.”

The problem initially was relatively simple: the government shutdown prevented farmers from enrolling because FSA office were closed. Fordyce said the best thing dairy farmers could do was contact their FSA representatives and “ask them when they’ll be ready to take sign-ups.”

Program’s praise

This coverage program has received kudos not only from Hamm and other dairy experts in the Western U.S. but  also from Wisconsin’s Bob Cropp and Mark Stephenson, dairy industry consultants and economists, who said the DMC “likely offers the best risk protection” in 2019.

“Dairy farmers are hurting and have been hanging on in hopes of something positive, and this bill delivers improvements for our farmers,” said Brody Stapel, president of the board of directors for Edge Dairy Farmer Cooperative, in progressivedairy.com.

“Specifically, for dairy, valuable reforms were made to the dairy title, making the risk management program much more useful to dairy farmers and their management plans,” commented John Rettler, president of FarmFirst Dairy Cooperative in a cooperative release. “This new program addressed changes in the feed-cost formula and allows greater flexibility for farmers of various sizes.”

“The dairy provisions adopted by Congress will bring critically important assistance to the nation’s dairy farmers,” said Jim Mulhern, president and CEO of the National Milk Producers Federation said in a NMPF release. “Dairy works best when it works together. Congress noticed. Hard work and cooperation … among agencies, member co-ops, state associations and the entire dairy community helped craft a bill that will benefit us all.”

More info = Relaxation

“More information will be revealed,” said Hamm, “and we all need to sit back and relax. This program and others will eventually arrive and California will finally be on an even playing field with the rest of the country.”