Dairy prices are on the rise, and the USDA Farm Service Agency noticed a drop in enrollment for dairy margin coverage.
The Dairy Margin Coverage (DMC) Program replaced the former Dairy Margin Protection Program (MPP). Sandy Chalmers, Wisconsin state executive director of the USDA Farm Service Agency, said MPP was not a popular program among producers.
“It really fell short in meeting its intended purpose, which was to provide a safety net for dairy producers.,” Chalmers said. “We had outstanding interest in the new Dairy Margin Coverage program in 2019. We had 59 dairy operations enrolled. We also made about $63 million in payments here in Wisconsin and about $308 million nationwide.”
The signup for DMC continues through Dec. 13 for 2020 coverage, but interest has been lower as milk prices rise and feed costs remain steady, making the margin between cost and profit the largest it has been in a long time.
“Payments are not triggered until the margin drops below $9.50, but I do encourage dairy producers, even though the forecast looked pretty good, really consider this program because everything can flip pretty quickly, and we have all lived through the pain and the volatility that we have seen in the dairy markets recently,” Chalmers said.
There are numerous risk management tools and programs available whether it is DMC, Dairy Revenue Protection, Livestock Gross Margin and more. Farmers can also utilize a Dairy Margin Coverage Decision Tool developed by Dr. Mark Stephenson from UW-Madison. That tool lets farmers look at the forecasted margin through 2020 and explore with various scenarios to see what expected payments would be.
Chalmers recommended the farmers.gov website as another resource. The information is developed by farmers for farmers. She also noted the usefulness of the farm loan discovery tool.
-Kaitlyn Riley
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