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Weekly Digest: DMC reminder is mailed

Published on 29 December 2021

Digest Highlights

DMC reminder: It’s in the mail

The USDA’s Farm Service Agency (FSA) has mailed postcards to dairy producers providing details on requirements necessary to enroll in the 2022 Dairy Margin Coverage (DMC) and Supplemental DMC (SDMC) programs. Enrollment for SDMC is separate from 2022 DMC enrollment. However, both can be handled in one FSA appointment.

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Dairy operations can register for SDMC and 2022 DMC and determine an election of coverage level and coverage percent during the registration and coverage election period. The deadline to enroll in both programs is Feb. 18, 2022.

DMC: Dairy operations that choose to register for coverage for 2022 must submit coverage elections on CCC-801 and pay the $100 administrative fee to the applicable county office, unless exempt.

SDMC: Eligible dairy operations must establish DMC production history of less than 5 million pounds, based on 2019 milk marketings. The production history must be approved on form CCC-800A. Eligible dairy operations must enroll in SDMC before enrollment in 2022 DMC, submitting a revised CCC-801 to receive additional DMC payments before the deadline.

Read: Supplemental DMC, hay payment levels updated.

Based on the USDA’s Decision Tool as of Dec. 28, 2022, DMC margins were projected to average $9.19 per hundredweight (cwt), dipping below $9.50 per cwt in all months except January-February and below $9 per cwt in April-July 2022.

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If the dairy operation’s business structure has changed or is no longer commercially marketing milk, contact the FSA office.

Local FSA staff continue to work with producers via phone, email and other digital tools. Due to the COVID-19 pandemic, some USDA Service Centers are open to limited visitors, so call in advance.

The USDA also announced that additional indemnity payments due to changes in hay price calculations are subject to a sequestration deduction rate of 5.9% on 2020 payments and 5.7% on 2021 payments.

The November DMC margin and potential indemnity payments will be announced on Dec. 30. Check the Progressive Dairy website for updates.

January 2022 Class I base price moves to 13-month high

The Federal Milk Marketing Order (FMMO) advanced Class I base price moved to a 13-month high for January 2022. At $19.71 per cwt, it’s up 54 cents from December 2021 and $4.57 more than January 2021. A Class I differential for each order's principle pricing point is added to the base price to determine the Class I price.

The difference between the advanced Class III skim milk pricing factor ($10.73 per cwt) and the advanced Class IV skim milk pricing factor ($12.21 per cwt) is $1.48 per cwt. Based on Progressive Dairy calculations, the Class I mover calculated under either the “average-of plus 74 cents” formula or the “higher-of” would be exactly the same.

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The 2021 Class I base price averaged $16.83 per cwt, down 8 cents from 2020 ($16.91 per cwt) and 16 cents less than 2019 ($16.99 per cwt).

Dairy cull cow slaughter slows

With milk prices and income margins improving, the USDA’s monthly Livestock Slaughter report estimated November 2021 dairy cow slaughter in federally inspected plants was down from October 2021 but up from November 2020.

November 2021 dairy cow slaughter was estimated at 245,300 head, down about 10,900 head from October 2021 but up about 15,900 head from November 2020.

November 2021 contained 20 non-holiday weekdays and four Saturdays; November 2020 contained 19 non-holiday weekdays and four Saturdays. October 2021 had 20 non-holiday weekdays and five Saturdays.

The increased rate of culling is contributing to a slowdown in milk production. (Read: November 2021 milk production lower.)

Through the first 11 months of 2021, dairy cull cow slaughter was estimated at 2.839 million, about 48,600 head more than the same period in 2020.

Heaviest dairy culling during November 2021 occurred in the Upper Midwest (Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin) at 60,500 head. That was followed by the Southwest (Arizona, California, Hawaii and Nevada), where 60,000 dairy cows were removed. Other regional totals were estimated at 39,700 head in Delaware, Maryland, Pennsylvania, West Virginia and Virginia; 28,900 head in Arkansas, Louisiana, New Mexico, Oklahoma and Texas; and about 26,600 head in Alaska, Idaho, Oregon and Washington.

During January-November 2021, 683,800 head were culled for slaughter from herds in the Upper Midwest, followed by 680,900 head from herds in the Southwest. The USDA estimates about 98% of all cattle are slaughtered in federally inspected plants.

In a separate report, weekly dairy cull cow slaughter slipped behind corresponding year-ago levels during the first two weeks of December.

USDA seeks string cheese

The USDA’s Agricultural Marketing Service is accepting bids for delivery of 113,400 pounds of mozzarella string cheese to locations in Arizona, Connecticut and New Jersey between April 1-June 30, 2022. Bids will be accepted until Jan. 11, with contracts awarded on Jan. 18.  end mark

Dave Natzke
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