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USDA begins issuing Dairy Margin Coverage program payments

Progressive Dairy Editor Dave Natzke Published on 11 July 2019

The USDA’s Farm Service Agency (FSA) has started issuing payments to producers who signed up for the Dairy Margin Coverage (DMC) program.

As of July 11, nearly 10,000 dairy operations had signed up for the new program, and FSA has begun paying approximately $100 million to producers for milk production insured from January through May 2019. A spot check by Progressive Dairy found some state FSA offices were issuing payments on July 8-9, while software issues in a few states caused delays of a day or two.

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More than 98% of the producers already enrolled have elected $9.50 per hundredweight (cwt) coverage on up to 95% of their production history. (Read: USDA reports strong early interest in Dairy Margin Coverage program.)

“Times have been especially tough for dairy farmers, and while we hope producers’ margins will increase, the Dairy Margin Coverage program is providing support at a critical time for many in the industry,” said Bill Northey, USDA undersecretary for farm production and conservation. “With lower premiums and higher levels of assistance than previous programs, DMC is already proving to be a good option for a lot of dairy producers across the country. USDA is committed to efficiently implementing the safety net programs in the 2018 Farm Bill and helping producers deal with the challenges of the ever-changing farm economy.”

DMC provides coverage retroactive to Jan. 1, 2019, with applicable payments distributed to eligible dairy farmers shortly after they enroll. Sign-up for the program began June 17 and closes Sept. 20, 2019, at local USDA FSA offices.

The May 2019 income over feed cost margin was $9 per cwt, triggering a fifth monthly payment for eligible dairy producers who purchased the $9.50 per cwt level of coverage under DMC. (Read: May margin adds to retroactive DMC payments.) Payments were previously triggered for January through April (Table 1).

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“DMC aid represents significant improvement from previous programs, and with dairy farmers facing a fifth year of low prices, receiving better assistance in a timely fashion is a matter of survival for some family farms,” said Jim Mulhern, president and CEO of the ational Milk Producers Federation (NMPF).  “The DMC program doesn’t replace a healthy market, but it is a crucial safety net in turbulent times. All dairy producers should strongly consider enrolling and to look closely at coverage at the $9.50 maximum level.”

Authorized by the 2018 Farm Bill, DMC replaces the Margin Protection Program for Dairy (MPP-Dairy). The program offers protection to dairy producers when the difference between the all-milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer.  end mark

Dave Natzke
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