Comparing the MILC and Margin Protection Programs

July 17, 2014 01:08 PM

One of the programs is a clear winner for dairies, according to a study from the University of Illinois.

Source: Farm Doc Daily

A new article by John Newton and Todd Kuethe of the University of Illinois Urbana-Champaign demonstrates the advantages for dairy producers of the Margin Protection Program (MPP) over the Milk Income Loss Contract (MILC) program.

Writing in the "Farm Doc Daily," the authors review the historical performance of the MILC program using data provided by USDA Farm Service Agency. They also demonstrate how the MPP, by increasing production coverage to be more accommodating to all U.S. dairy producers, offers a larger safety-net program and is capable of providing considerably more production coverage than the existing, and soon-to-be-expired, MILC program.

Newton and Kuethe mapped the safety net support provided by the MILC program and used data from USDA on state-level milk production to map the pounds of milk eligible to purchase MPP. They then compared the MPP coverage capacity to the historical performance of the MILC program to approximate the magnitude of the increase in the dairy farm safety net.

"Results of this analysis indicate that MPP is capable of providing considerably more production coverage, at 182 billion pounds, than the soon-to-be-expired MILC program," the authors say.

Read the article here.


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