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Need cash? Get to FSA office for MFP payments

Progressive Dairyman Editor Dave Natzke Published on 18 September 2018

With milk prices low and margins tight, dairy farmers seeking a quick infusion of some cash may want to get to the USDA Farm Service Agency (FSA) office to apply for payments under the Market Facilitation Program (MFP).

Sign-up period for the payments, part of USDA’s Trade Mitigation Program designed to offset negative economic impacts from ongoing trade wars and retaliatory tariffs, opened Sept. 4 and runs until Jan. 15, 2019. Applications are available online and through local FSA offices.

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Since dairy payments are based on milk production history, initial applications for producers who already have production history established under the Margin Protection Program for Dairy (MPP-Dairy) should take five to 10 minutes, said Sandy Chalmers, FSA state executive director in Wisconsin.

The payment will be 12 cents per hundredweight (cwt) on half of their highest annual milk production history in 2011-13. In most cases, dairy producers have been receiving payments direct deposited in their bank accounts within three to five days following application, Chalmers said.

Based on trade negotiations and market conditions, USDA will determine in December whether a second payment is justified.

Farmers applying for MFP payments who haven’t heard from their FSA office are urged to call to set up an appointment.

Dairy farmers not participating in MPP-Dairy, new operations and those having gone through a recent generational transfer must provide milk production records to establish history with the FSA office. Dairy operations are also required to have been in operation on June 1, 2018, to be eligible for payments.

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FSA offices will likely get busier with crop producers later this year as field crop harvests are completed. Producers can wait until their grain harvest is complete to sign up for MFP payments and take care of both applications in one visit, minimizing the number of trips during fall harvest. However, with wet weather limiting access to fields in some areas, delayed harvest will also mean delayed payments for eligible crops, including corn, cotton, sorghum, soybeans and wheat.

FSA will also accommodate farmers who want to delay payments until 2019 to move income into the new tax year.

Read also: Dairy tariff aid application period underway

‘Protecting Your Profits’ call is Sept. 26

The Pennsylvania Center for Dairy Excellence’s (CDE) monthly “Protecting Your Profits” call will be held Wednesday, Sept. 26, at noon. The call will be led by Alan Zepp, CDE risk management program manager.

Join the 15 minute call for a short discussion on dairy market fundamentals and marketing plan strategies utilizing Chicago Mercantile Exchange futures contracts, the Margin Protection Program for Dairy (MPP-Dairy) and Livestock Gross Margin for Dairy (LGM-Dairy). Additional topics include the USDA’s Market Facilitation Program and the new Dairy Revenue Protection (RP-Dairy) insurance policy.

To register and obtain the conference line information, call (717) 346-0849 or email Zepp.

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Calls are recorded and posted on the CDE website under the “Dairy Information” tab for those who are unable to join the live session.

Dairy margins start September flat

Dairy margins were pretty flat over the first half of September, with lower trade in both milk and feed markets largely offsetting one another, according to Commodity & Ingredient Hedging LLC. Margins remain above the 70th percentile of historical profitability over the past 10 years, offering producers opportunities to protect margins into 2019. 

Milk prices have slipped following weakness in cash cheese trade, with futures dropping about 7 cents recently, to the mid-$1.60 per pound range. July dairy product exports were down 9 percent from June, but still 11 percent above July 2017.

Meanwhile, USDA’s September World Agricultural Supply and Demand Estimates report indicated a sharp increase in projected corn yield and production from August. Corn growers continue to report yields well above expectations, which portends further potential yield and production increases.

Global Dairy Trade prices lower again

Global Dairy Trade (GDT) dairy product prices were lower during the auction held Sept. 18.

Among major products, the cheddar cheese price was down 3.5 percent to $3,503 per metric ton (MT); the butter price was down 0.1 percent to $4,270 per MT; skim milk powder was down 1.1 percent to $1,980 per MT; and the whole milk powder was down 1.8 percent to $2,768 per MT. The overall index was down 1.3 percent.

The next GDT auction is Oct. 2.

October Class I base price moves higher

There was some good news: The October 2018 Federal Milk Marketing Order (FMMO) Class I base price is $16.33 per cwt, up $1.48 from September but 11 cents less than October 2017’s price of $16.44 per cwt. It’s the highest Class I base price of the year to date.

Through the first 10 months of 2018, the Class I base average is just $14.75 per cwt, about $1.66 less than the average for the same period in 2017.  end mark

Dave Natzke
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