Premiums for Margin Protection Program due Feb. 3

January 30, 2015 12:50 PM
Premiums for Margin Protection Program due Feb. 3

Make sure your premium payments are on time.

Premiums for dairy producers who are participating in the Margin Protection Program (MPP) above the $4 level must be paid by Tuesday, Feb. 3, reminds Dairy Farmers of America (DFA). The balance of the 2015 premium is due no later than June 1.

It’s important that producers pay those premiums on time, says Bob Devenport, a commodity analyst with Stewart-Peterson.

“If producers are late on their payment, it would result in a loss of coverage, much like the loss of coverage you would experience if you didn’t pay your car insurance on time,” Devenport says.

As a service to members, DFA Financing offers an operating line of credit to assist in paying for premiums. That should be helpful to many producers, adds Devenport.

“If a producer selected a higher level of MPP coverage, the premiums due can be very sizeable, and would be a very large capital outlay at one time,” he says. “Financing will make it much easier to swallow. “

At the end of March, it will be clear if any MPP payments were paid to participants in the first two months of 2015. Payments are based on both milk and grain prices.

“We’ll know then if the decline in milk prices and the level of grain prices have been enough to warrant an MPP payment,” says AgDairy Market’s Robin Schmahl.

The Margin Protection Program is a new safety net program under the 2014 farm bill that provides dairy producers with payments when dairy margins fall below the margin coverage levels the producer chooses each year. It was designed to protect farm equity by guarding against destructively low margins, not to guarantee a profit to individual producers. Sign-up concluded on Dec. 19, 2014.

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