Dairy signup exceeds 5,000 operators
More than 5,000 dairy operations have signed up for the new Dairy Margin Coverage program since signup began on June 17, Agriculture Undersecretary for Farm Production and Conservation Bill Northey said in a telephone news conference today.
The exact number of signups was 5,364 as of midday today, Northey said.
There are about 40,000 dairy operations that are eligible, but Northey said he is pleased with the level of signup in the first 10 days. About 21,000 farmers participated last year in the dairy Margin Protection Program that many producers did not like.
Created by the 2018 farm bill, the DMC replaces its predecessor, the Margin Protection Program for Dairy, which many producers did not consider worthwhile. The new program makes payments 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.
The DMC won’t solve all the problems in the dairy industry, but “offers a little bit of support in a challenging time,” Northey said.
The program is retroactive to Jan. 1. Northey said USDA hopes to make payments soon, but he added that the White House Office of Management and Budget has not approved all the details of the program.
Alan Bjerga, a spokesman for the National Milk Producers Federation, said, “We’re encouraged by the pace of signups. Farmers who need assistance immediately are able to sign up right away, and given we’re only 10 days into a three-month signup window, having more than one-eighth of all producers sign up shows that the word is getting out. At the same time, some producers will have incentive to wait, given that payments are retroactive to Jan. 1, and the longer they wait, the more data they will have for determining coverage levels.”
Producers are eligible to take out coverage at a $9.50 margin level for the first 5 million pounds of milk, and “almost everyone” has taken out that Tier I level of coverage. The 5 million pound level covers the production of about 200 to 250 cows, Northey said. Beyond the first 5 million pounds, producers can sign up at lower levels of coverage. About 900 producers have signed up at the $4 level and 100 at the $5 level.
About half of the producers have signed up for the five-year life of the program, which qualifies them for a 25 percent premium discount. Half have elected for annual coverage, Northey said.
For participants in the old MPP, if their premiums paid exceeded indemnities paid out, they are eligible for credits for the new program or cash payments.
About 3,000 MPP participants have used credits valued at $13 to $14 million to pay initial premiums in the DMC program. Another 1,400 operations have asked for cash payments that have totaled $5 million.
Farmers who take the credits get 75 percent of the value of their accounts, while those who take cash payments get 50 percent.
The DMC is run by the Farm Service Agency, and producers can sign up at their local county offices through Sept. 20.
All dairy operations in the United States are eligible for the program, USDA noted. An operation can be run either by a single producer or multiple producers who commercially produce and market cows’ milk. There are also no restrictions on participating in DMC in conjunction with any other Risk Management Agency insurance products.
To assist producers in making coverage elections, producers can use the DMC decision support tool. The decision tool, developed in partnership with the University of Wisconsin, can be used to evaluate various scenarios using different coverage levels through DMC.