A survey of dairy farmers attending the Vita-Plus Dairy Summit here in Welch, Minn. shows relatively strong interest in the dairy margin protection program (MPP). Sign-up for the program ends December 19.
Marin Bozic, a University of Minnesota dairy economist, conducted the survey using a smart phone app and text messaging for instantaneous survey results. Of the 69 farmers who participated in the survey, 62% had already signed up for MPP and another 10% were considering signing up.
Of those who have already signed up, 40% opted for the minimal, $4/cwt margin insurance. But about 25% signed up for $6 coverage and a like number signed up for $6.50 coverage. Roughly 90% of those who signed up also opted for 90% coverage of their historic production base.
Because of the risk protection offered, about a 20% of those signing up say they are more likely to expand their herds in the next three years. But the vast majority, 76%, say they will maintain herd size. About 15% say they will do less culling when times get tight if they have coverage, but again, 75% predict their culling patterns will remain the same.
While there has been a lot of discussion about how much coverage and the level a producer should take, Bozic says no two farms are alike. The key questions, he says: “How much money do you have on the line, and what level of risk are you willing to take?”
Because dairy price supports and the Milk Income Loss Income program are now history, risk management is entirely up to individual farmers. “If you don’t make a decision (on MPP participation or other risk management), you have made a decision to carry more risk than ever before,” he says.
Read more on the Dairy MPP here.
Click here for a useful tool to help analyze coverage levels.
to see Bozic's slides, podcast and a new maximum loss MPP-Dairy calculator introduced in his talk at the Vita Plus Dairy Summit 2014"