Dairy Industry Frustrated, Wanting Change with MPP

November 15, 2016 11:11 AM

The 2018 farm bill is on the minds of those in farm country, a task in the hands of this new administration. In particular, dairy producers are frustrated with their current insurance levels.

A glut of dairy product is weighing on the market and the effects are trickling down to the producer.

“The price of milk we’re receiving right now is at or below the cost of production—I would say the majority of people—certainly a downward trend in prices since 2014,” said Gordon Speirs, a Wisconsin dairy producer.

Dairy producers across the Midwest say their insurance is not relieving prices either. Producers may use the Margin Protection Program under the current farm bill. However, industry leaders say MPP isn’t made the way that was proposed and isn’t as effective as hoped.

“Last year we took the baseline insurance,” said Speirs. “We haven’t taken a penny out of it and all we have done is feed it. I believe the program is broken.”

Industry leaders say the feed formula was changed 10 percent due to budget constraints. It took off $1/cwt and changed the coverage.

“If we had stuck with the original numbers of the formula before they were changed, because of cost concerns, we would have seen a lot more payouts,” said John Holevoet of the Wisconsin Dairy Business Association.

“Under the original proposal, farmers could have received payments up to four dollars in some regions,” said Jim Dickrell, managing editor with Dairy Herd Management. “We were close to catastrophic levels back then.”

That’s why the industry believes the insurance portion of the bill needs to be changed for the next one. The National Milk Producers Federation is exploring options for improving MPP, and that could involve attaching it to a bill prior to the new farm bill. Representatives say they hope to agree on a course of action when the board of directors meets next in March.

“We want to look at getting back to the original rates proposed,” said Randy Mooney, chairman of the National Milk Producers Federation (NMPF). “We want to look to see if the premiums are right. We want to look at different tiers in the program.”

While it is wishful thinking, some say trying to make the change before the next farm bill will be difficult.

“I don’t know if politically they can go back and fix it or not or adjust who will be eligible or how they will be eligible or like that,” said Dickrell. “However, we’re always fighting the federal budget with the deficit so large, it’s going to be an ongoing battle to get a fix which will help everyone.”

California producers are sour towards the MPP program too. Some California producers feel their location makes a difference with their Margin Protection Program insurance coverage as well.

“Most of these government programs aren’t geared for Californians,” said Greg Hooker, a California dairy producer. “We get little benefit out of those things. The way they value milk and feed, it’s a Midwestern calculation, which is different from California.”

Policy the dairy industry needs as they deal with an excess product.

“We go through good times and bad times and absorb some of those times with losses,” said Hooker. “That’s the nature of the business.”

NMPF representatives says they don’t expect any changes at this time which will include regional adjustments in pricing, feed costs or milk prices. 

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Spell Check

Jackie Schmidts
Lake Placide, NY
11/18/2016 09:24 AM

  It seems to me dairy producers want their cake and be able to eat it too. They created the FMMO system, which they say doesn't work, but won't vote to remove it. California dairy producers are lobbing hard to create a FMMO there, but don't see their peers around the country complaining about their Orders and how they don't work. Seems the Californian's are just creating a bigger headache by asking for an Order there. The dairy producers, through the National Milk Producer's Federation lobbied for and created the MPP program and now complain it isn't good enough. It seems to me dairy farmers are their own worse enemy. They create these artificial programs to help them but in the end they refuse to recognize supply and demand as the only true method to sustainability. My suggestion, get rid of the programs, allow supply and demand to determine how much milk should be produced and eventually what the true price of a cwt. of milk will be worth, not only here in the U.S. but around the world.


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