The Conference Committee released its conference report offering details on the 2018 Farm Bill, including language around changes to dairy’s Margin Protection Program. The new program, called the Dairy Margin Coverage (DMC) program, offers significant changes to the old MPP program that will benefit dairy producers.
The coverage level was raised from $8 to $9.50, it’s much more affordable and there’s also an opportunity for producers that had participated in the old Margin Protection Program to get a refund on some premiums to be used either toward paying for their Dairy Market Coverage or take an immediate refund. And it’s more friendly for all operations regardless of size.
“[The Dairy Margin Coverage program] certainly makes it possible for medium and large operations to be able to utilize the margin protection program at both the Tier 1 and Tier 2 levels,” says John Newton, chief economist with the American Farm Bureau Federation. “At the Tier 1 level they can cover as little as 5% of their production history in order to get benefits. And for smaller folks, they raised the coverage level to 95%.”
As expected, the report drew positive support from those in dairy country.
“[The Dairy Margin Coverage program] is certainly an enhancement to what was done in the Bipartisan Budget Act in February 2018,” Newton says. “It corrects what was wrong with the previous program by making this program much more affordable and offer support more frequently.”
The National Milk Producers Federation (NMPF) thanked members of Congress, especially the bipartisan leaders of the House and Senate Agriculture Committees, for crafting a farm bill that “includes much-needed reforms to help American dairy farmers.”
“Members of Congress on both sides of the aisle should be commended for reaching a deal that will benefit U.S. agriculture and ensure safe, affordable food for Americans and the world,” says Jim Mulhern, president and CEO of NMPF. “A new law is especially important for dairy, a sector struggling with low prices and disrupted exports. We thank lawmakers for addressing our concerns with measures that will help producers in need.”
The International Dairy Foods Association (IDFA) also commended bipartisan leadership to get the report finalized.
“Managing price risk and increasing consumption are IDFA’s key priorities, and we commend the farm bill conferees and the leaders of the House and Senate Agriculture Committees — Chairman Mike Conaway, R-Texas; Ranking Member Collin Peterson, D-Minn.; Chairman Pat Roberts, R-Kan.; and Ranking Member Debbie Stabenow, D-Mich. — for producing this bill. It will provide increased health benefits to consumers, while empowering dairy processors and producers to help fuel the American economy,” says Michael Dykes, D.V.M., IDFA president and CEO. “With this new pricing provision in place, both producers and processors would gain much-needed benefits from hedging fluid milk through the futures market.”
FarmFirst Dairy Cooperative appreciates the flexibility now available to dairy producers regardless of size.
“Dairy farmers are smart about managing their costs and increasing their bottom line, but risk management options are not a one-size-fits-all. This new program addressed changes in the feed-cost formula and allows greater flexibility, allowing farmers of various sizes to participate in Tier 1 premium rates, as well as allowing simultaneous participation in this new program and the Livestock Gross Margin (LGM) insurance program,” says John Rettler, president of FarmFirst Dairy Cooperative.
With the ability to utilize the Livestock Gross Margin insurance, the Dairy Revenue Protection program and now the DMC, producers have a significant variety of options to help them protect their business.
“I think dairy farmers, for the first time ever, have a full suite of risk management tools available to them similar to their crop production brethren,” Newton says.