USDA to issue $100M in Dairy Margin Coverage payments

The USDA began issuing payments for the new Dairy Margin Coverage program this week.

To date, nearly 10,000 operations have signed up for the new program, and FSA estimates it will pay out nearly $100 million to producers who purchased the coverage. Payments are retroactive from January through May, according to USDA officials. 

“Times have been especially tough for dairy farmers, and while we hope producers’ margins will increase, the Dairy Margin Coverage program is providing support at a critical time for many in the industry,” said Bill Northey, USDA Under Secretary for Farm Production and Conservation.

With lower premiums and higher levels of assistance than previous programs, Northey said Dairy Margin Coverage is already proving to be a good option for a lot of dairy producers across the country.

"The USDA is committed to efficiently implementing the safety net programs in the 2018 Farm Bill and helping producers deal with the challenges of the ever-changing farm economy," he said. 

Authorized by the 2018 Farm Bill, DMC replaces the Margin Protection Program for Dairy (MPP-Dairy). The program offers protection 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.

FSA opened enrollment for the program on June 17. However, producers can enroll through Sept. 20, 2019. 

May Margin Payment 

The May 2019 income over feed cost margin was $9.00 per hundredweight (cwt.), triggering the fifth payment for eligible dairy producers who purchase the $9.50 level of coverage under DMC. Payments for January, February, March and April also were triggered.

With the 50 percent hay blend, FSA’s revised April 2019 income over feed cost margin is $8.82 per cwt. The revised margins for January, February and March are, respectively, $7.71, $7.91 and $8.66. 

Northey said dairy producers can choose coverage levels from $4 up to $9.50 at the time of signup.

"More than 98 percent of the producers currently enrolled have elected $9.50 coverage on up to 95 percent of their production history," he pointed out.