WASHINGTON - The USDA's Farm Service Agency announced this week that dairy farmers have the ability to opt out of the Margin Protection Program for 2018.
Many farm groups including the American Farm Bureau Federation applauded the news, saying the risk management tool was a poor safety net.
"Approximately 24,000 dairy farms, representing 80 percent of the U.S. milk supply, are currently enrolled in the program, however, this year only 2 percent of the milk enrolled participated at levels above the basic coverage option," said AFBF President Zippy Duvall. "The low participation rate is due to the poor performance of MPP in providing a viable safety net to dairy farmers."
Acting Deputy Under Secretary for Farm Production and Conservation Rob Johansson told the media that Ag Secretary Sonny Perdue authorized the withdrawal and waived the $100 administrative fees for the upcoming year.
Duvall said MPP, a voluntary program, was introduced during the 2014 farm bill and was intended to offer protection against declines in the national average income-over-feed-cost margin — the difference between the milk price and the cost of feed on a dairy.
"However, dairy farmers participating in the program were required to pay a $100 administrative fee each year for the basic coverage option and once enrolled were required to remain in the program for the five-year life of the farm bill," Duvall said.
National Milk Producers Federation President and CEO Jim Mulhern said the MPP doesn't meet the needs of producers.
"...declining participation levels amply illustrate farmers’ disenchantment with the MPP," he said. "Looking ahead, Congress must make more resources available to the MPP, so that the program provides a more effective, affordable safety net – one that provides support when farmers need it."
Enrollment for MPP coverage in 2018 begins Sept. 1 and runs through Dec. 15, 2017. Those wishing to exit the program would simply refrain from registering during the enrollment period. The decision to opt out is for 2018 only and is not retroactive.
Duvall says dairy farmers need access to effective risk management tools going forward.
Both Duvall and Mulhern noted that their respective organizations look forward to working with USDA and Congress to enhance the dairy safety net.