New tool available from UW-Extension
USDA’s Farm Service Agency (FSA) announced the signup period for the new Dairy Margin Coverage (DMC) program will open June 17, 2019. Dairy producers who elect a DMC coverage level between $9 and $9.50 would be eligible for a payment for January, February, March and April 2019.
DMC, which replaces the Margin Protection Program for Dairy (MPP-Dairy), offers protection to dairy producers when the difference between the all milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer.
For example, a dairy operation that chooses to enroll an established production history of 3 million pounds (30,000 cwt.) and elects the $9.50 coverage level on 95 percent of production would receive $1,543.75 for March.
$9.50 – $8.85 margin = $0.65 difference
$0.65 x 95 percent of production x 2,500 cwt. (30,000 cwt./12) = $1,543.75
DMC premiums are paid annually. The calculated annual premium for coverage at $9.50 on 95 percent of a 3-million-pound production history for this example would be $4,275.
3,000,000 x 95 percent = 2,850,000/100 = 28,500 cwt. x 0.150 premium fee = $4,275
The dairy operation in the example calculation will pay $4,275 in total premium payments for all of 2019 and receive $9,950 in DMC payments for January, February, March and April combined. Additional payments will be made if calculated margins remain below the $9.50/cwt level.
All participants are also required to pay an annual $100 administrative fee in addition to any premium, and payments will be subject to a 6.2 percent reduction to account for federal sequestration.
For DMC signup, eligibility and related dairy program information, contact your local USDA service center. To locate your local FSA office, visit farmers.gov/service-locator.