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Senate Ag Bill Offers Breaks for Smaller Dairy Herds

April 23, 2012

The Senate Agriculture Committee’s 900-page Farm Bill proposal contains low-priced margin insurance for the first 4 million lb. of annual milk production. These lower rates are available to all herds regardless of herd size.

For those producers who opt to participate in the Margin Protection Program, the first $4 of margin is covered by the government (after farms pay a small administrative fee to participate).  Supplemental insurance for higher margins can then be purchased annually.
Premiums for the supplemental coverage are offered for the first 4 million lb. of production at low cost; premiums for coverage over 4 million lb. of annual production are substantially higher.
Margin Level               0 to 4 million lb.         More than 4 million lb.
$4.50                                 $     0.01                            $   0.02
 5.00                                         .02                                   .04
 5.50                                         .035                                 .10
 6.00                                         .045                                 .15
 6.50                                         .09                                   .29
 7.00                                         .40                                   .62
 7.50                                         .60                                   .83
 8.00                                         .95                                  1.06
Those producers signing up for margin insurance also agree to curtail production (or have funds withheld from their milk checks) under the Market Stabilization Program when margins fall $6/cwt for two consecutive months or below $4 for one month.
But the bill also contains circuit breakers that would forestall the market stabilization program if domestic cheese and skim milk prices equal or exceed world prices for these commodities.
The Senate Bill contains no Federal Milk Market Order reforms.
The Senate Ag Bill can be read here. The dairy provisions can be found on pp. 68 – 111.

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RELATED TOPICS: Dairy, Policy, News, Milk, Risk Management

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COMMENTS (1 Comments)

James Maroney - Leicester, VT
these mechanisms pertain to large farms more than small and only ensure that the crisis will not be addressed: why not install prescriptions against production at all farms such as lowering the somatic cell count to 150,000, or forbidding the use of sex semen or 3x milking?
6:18 PM Apr 23rd



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