Results Matter, and the DMC Delivers

Getting results for members is central to the mission of any trade organization.
Fortunately, thanks to a great deal of hard work by our expert staff, NMPF has important achievements to point to that will make life better for the folks we serve.
One major accomplishment came to fruition in June, with signup beginning for the Dairy Margin Coverage program. This program will not only tangibly aid farmers struggling with low prices; it will help milk producers even more than we first reported when the farm bill that contained it was signed into law last December.

A quick recap: After the Margin Protection Program, an effort wounded out of the gate because of Congressional budget compromises from 2014, clearly showed it was inadequate for farmer needs, we went to work immediately in an effort to fix it. The effort took more than two years, but it paid off. First, by improving MPP in early 2018 budget legislation, then by replacing it with a better program in the farm bill late last year. The new DMC, along with other pro-dairy policies in the law, clearly outdoes previous initiatives, and we’re excited it’s finally becoming reality.
But even with the new law in place, we knew it wasn’t time for a victory lap — not with farmers still suffering from low prices and with more opportunities to solidify potential improvements to help members through the USDA rulemaking process. That set the stage for another accomplishment, one that finally reached fruition last month.

One farm-bill dairy provision we secured that was little-noted at the time, but that we knew had potential to further help producers, was a new requirement that USDA report the prices of higher-quality alfalfa feed in top dairy-producing states. We sought the provision in the farm bill because we knew the previous program’s feed-cost calculations did not fully reflect the true cost of dairy-quality hay. Obtaining the reporting provision in the farm bill was an opportunity to show more precisely the cost burden this feed was imposing on farmers. Calculations that best reflect industry cost-price fundamentals across the country is the spirit of the program, which is meant to help dairy farmers facing an income squeeze because of those higher feed costs.

We quietly made this case in meetings with USDA through the first half of the year — and it’s one that, thankfully, Secretary Perdue and the staff at USDA heard sympathetically. Less than a week before signups began June 17, USDA announced it would incorporate dairy-quality hay costs into DMC margin calculations.

The impact is immediate. Early this month, USDA reported that the May margin under the DMC program is $9.00 per hundredweight. That reported margin is 12 cents lower than it would have been otherwise, meaning payments for farmers who enroll at the maximum $9.50 coverage level allowed under the program will be 12 cents higher because of the calculation change. For the first five months of 2019, hay values have averaged $0.21 cents/cwt. higher under the new formula. Again, participating dairy farmers will as a result of this change receive a greater payment, one many will need desperately in what is now our fifth year of low prices.

The DMC – now with its enhanced feed-cost calculation – is a tangible benefit for NMPF members as well as all the nation’s dairy farmers who sign up for the program. It came from the industry unity that was forged as we moved ahead on the farm bill, and it came from maintaining the discipline to focus on a realistic, achievable, dollar-and-cents return. It’s important to thank the many people who contributed to this effort: NMPF member cooperatives, numerous state dairy associations, IDFA, the lawmakers who drafted the farm bill, the administration officials who are implementing it – and the hard-working staff here who helped guide all of this into reality, and many more.

According to USDA, more than 5,300 producers enrolled in the DMC in the first 10 days of the sign-up period, with 98 percent of those who signed up for Tier I coverage of the first 5 million pounds selecting $9.50 coverage. About half of all producers signed up for the full five-year length of the program. With checks going out in July, those who needed assistance immediately are receiving it, and those who are waiting for more information – or perhaps just a pause in their busy schedules – have until September. I strongly encourage all producers to take a good look at the new program and be sure to get into their county Farm Service Agency office to sign up.
Our efforts now are focused on providing resources and expertise to aid with signup, including on our website and through member communications, to make sure that farmers have the information they need to make the right decisions.
Like the dairy farmers we serve, our work is never done. But just as dairy delivers, that’s our goal too. A DMC that’s even better than it would have been is the kind of result we strive to achieve here every day at NMPF. We are proud to serve our members and the entire dairy producer community. Thank you for the hard work you do, which inspires us to do the same.

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