Dairy Talk: 2016 Dairy MPP Participation Will Likely Decline

August 26, 2015 09:43 AM

If you want to know what dairy farmers are thinking, ask them. Last week, we placed a poll , asking about 2016 Dairy Margin Protection Program participation. (Note: If you haven’t taken the survey,   there’s still time.)

Needless to say, we got an earful. Some of the responses were unfit to print in a family publication such as Dairy Today. Others were more thoughtful.

The poll was unscientific—anyone clicking on the link could participate. Attitudes, of course, could change as futures markets fluctuate and the September 30 deadline approaches. Consequently, the results have to be taken with a grain of salt.

Nevertheless, the results were interesting from the 100 or so responses we received. Farmers from 27 states responded, with about half of those coming from the Midwest, a fourth from the Northeast and a fifth from the West.

Roughly 70% of survey respondents say they participated in the MPP program last year. About 28% of those who participated say they will not participate again in 2016 (even though, under the rules, they are now enrolled for the life of the program).

Of those who will again participate in the MPP in 2016, roughly 40% will sign-up for the same coverage level as 2015. But 50% will reduce their coverage level—many, though not all, to the $4 catastrophic level. The remainder will actually increase their coverage level—some from $4 to $6 or $6.50.

It’s an understatement that some farmers were disappointed in the MPP last year. Says one Washington farmer, who milks between 1,000 and 2,000 cows, “I believe we were all over sold on the program. I regret the decision!”

And a New York farmer, who milks between 100 and 249 cows, says: “This program was a complete waste of money and time. Should have known it wouldn't work and I'm wondering what the government will be doing with all the premium money it collected.”

But others were more measured:

“We will not know the effectiveness of this program until we experience really low margins,” says a Wisconsin farmer with 100 to 249 cows.

Adds this Colorado farmer with more than 2,000 cows: “Seems to be good catastrophic insurance that is reasonably priced if you select the correct coverage.”

From my reading of the survey comments, most of those who were disappointed with MPP didn’t fully understand it. First and foremost, the MPP was designed as a risk management program. Each farm is different; each farm has its own risk profile.

To better understand that, see our story, “MPP—Yes or No.”  Dairy economists have come up with an advanced decision tool to help farmers assess their level of risk. The decision tool takes into account your cow numbers, milk per cow, expenses, risk management tools employed, working capital per cow and debt-to-asset ratio.

Using the tool, say economists, will allow farmers to make a reasoned decision on whether to participate in the MPP, and at what levels if they decide to.




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Spell Check

gretchen maine
waterville, NY
8/28/2015 08:08 PM

  I already left a comment when I did the survey, but it needs to be repeated. This so called safety net is nothing but a farce. By the time most farmers will be able to collect anything at all, they will already be calling the auctioneer or the bankruptcy lawyer.

niangua, MO
11/18/2015 05:54 PM

  When the government is setting both the minimum price of milk and the feed price used to calculate the margin it's no wonder none of get paid. They just want us to pay more premiums and use that money for something else like they do everything. Fool me once shame on you, fool me twice shame on me.

Disappointed Farmer
Hedge City, UM
8/28/2015 02:39 PM

  How nice to write off the disappointed farmers as the ones who don't understand it. I'll admit, I'm not too smart, but I do understand it is a risk management program. I also understand that I wouldn't spend my hard-earned dollars to pay premiums on a farm building insurance policy that only pays a small indemnity if my farm both burns down and gets hit by a tornado at the same time. The University people have received dollars from this program to help farmers "understand" it, and because of this they have become full-blown promoters of MPP. What is the ag media's excuse? Do you receive advertising dollars from milk processors?


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