December 19, 2018
USDA highlights benefits of improved dairy safety net tool
More than 21,400 US dairy producers opted for coverage through the USDA's Margin Protection Program for Dairy(MPP-Dairy) in 2018, up by more than 2,000 producers from the previous year, the USDA announced.
This programme was significantly updated in February by the Bipartisan Budget Act of 2018. US Agriculture Secretary Sonny Perdue said those changes attracted more producers to enroll in the safety net programme or to increase their coverage.
"Dairy producers have long been battling low prices, high input costs, and a surplus in the global market. Unfortunately, the 2014 Farm Bill did not provide a sufficient safety net to dairy producers and so it was timely that Congress opted to provide additional support through the Margin Protection Program last February," Perdue said.
"We are pleased to announce that roughly half of our nation's dairy producers enrolled for coverage under this reworked programme, providing additional capital to keep some of these folks afloat. We understand that this is not a total fix nor long-term solution for dairy producers, but we are glad that the Farm Service Agency was able to spring into action to get these critical payments out the door just a few months after the legislative changes were enacted. USDA is looking forward to prioritising the implementation of the Dairy Margin Coverage Program, the new longer-term, more comprehensive dairy safety net programme, following the passage of the 2018 Farm Bill."
MPP-Dairy, which is administered by USDA's Farm Service Agency, protects dairy producers by paying them when the difference between the national all-milk price and the national average feed cost (the margin) falls below a certain dollar amount elected by the producer.
Many producers received their first MPP-Dairy payments in February 2018, according to the USDA. Most producers who have chosen premium coverage levels of US$7, US$7.50, or US$8 have also seen a payment for every month since February. For these seven months, over US$253 million in payments have been made to dairy operators.
The Bipartisan Budget Act made several changes, including providing monthly payments instead of bi-monthly; permitting of dairy operations that had not participated before to enroll in the programme; covering five million pounds of production (instead of four million pounds) on the Tier 1 premium schedule; significantly reducing premiums per hundredweight under the Tier 1 premium schedule; and exempting limited resource, beginning, veteran, and disadvantaged dairy operators from paying the annual administrative fee.
While enrollment for MPP-Dairy has closed, USDA encourages dairy producers to consider other programmes, including the Dairy Revenue Protection Program, Livestock Gross Margin Insurance for Dairy Cattle, Environmental Quality Incentives Program and Conservation Stewardship Program.