Dairy farmers face low milk prices, high operational costs, waning consumer demand
In farm country outside Buffalo, New York, you will find Frank Valent working with his 80 or so Holstein and Jersey cows to put milk on America’s table. Travel about 200 miles southeast to Ohio, Frank Burkett III operates a larger dairy operation with around 700 Holsteins.
These dairymen may manage different size farms, but they have more in common than both being named Frank. Like dairy farmers across the country, both are facing low milk prices, increasing operational costs, and waning consumer demand.
On the other side of Lake Erie in Michigan, another dairyman, Jim Reid, operates a herd of around 230 Holsteins on his family farm that was established 150 years ago. Jim also participates in the program.One resource they both take advantage of is Margin Protection Program for Dairy, a voluntary risk management program for dairy producers available through USDA’s Farm Service Agency. This program offers protection to dairy producers when the difference between the national all-milk price and the national average feed cost falls below a certain dollar amount selected by the producers.
None of the three would want to be doing something else. They love what they do. As Frank Valent says, “dairy farming is a labor of love.”
About the Program
All three farmers are not new to farming, as they grew up on or around their families’ farms. But whether new or old, dairy operations currently are facing and will continue to face the many challenges of operating in the ever-changing dairy industry.
These changes included changing the schedule of payments to monthly instead of bi-monthly, permitting dairy operations that had not previously participated to enroll in the program, covering 5 million pounds of production (instead of 4 million) on the Tier 1 premium schedule, significantly reducing premiums per hundredweight under the Tier I premium schedule, and exempting limited resource, beginning, veteran, and disadvantaged dairy operators from paying the annual administrative fee.
Since the program was updated, Jim and both Franks have chosen a premium coverage level, and all three have received payments most months since the program changed. Almost all producers who enrolled in 2018, around 21,000 operations, chose premium coverage levels of $7, $7.50, or $8.
“We are pleased to announce that roughly half of our nation’s dairy producers enrolled for coverage under this reworked program, providing additional capital to keep some of these folks afloat,” said Agriculture Secretary Sonny Perdue in a Dec. 17 news release.
“We understand that this is not a total fix nor long-term solution for dairy producers, but we are glad that the Farm Service Agency was able to spring into action to get these critical payments out the door just a few months after the legislative changes were enacted. USDA is looking forward to prioritizing the implementation of the Dairy Margin Coverage Program, the new longer-term, more comprehensive dairy safety net program, following the passage of the 2018 Farm Bill.”
Other USDA Assistance
While signup for the Margin Protection Program for Dairy is now closed, USDA offers a variety of programs to help dairy producers stay in business, manage risk, and conserve natural resources. To learn more, visit your local USDA service center. To find your local office, visit www.farmers.gov.