USDA dairy safety-net program offers flexible coverage options


Producers have until Friday, Dec. 11, 2020, to enroll in DMC

The deadline to enroll in Dairy Margin Coverage (DMC) for the 2021 program year is fast-approaching. Dairy producers have until Friday, Dec. 11, 2020, to enroll in DMC through your local Farm Service Agency (FSA) county office here in New York. At about $0.15 per hundredweight, DMC is one of the more cost-effective dairy risk management options available.

DMC offers reasonably priced 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. The program can be used in conjunction with other available risk management tools, such as the Livestock Gross Margin Insurance Plan for Dairy Cattle (LGM) or Dairy Revenue Protection (Dairy RP) both of which are offered through the Risk Management agency (RMA). Participation in DMC does not prevent producers from also participating in other available USDA safety-net, disaster assistance, conservation or credit programs.

As a dairy producer, you are no stranger to risk, and you recognize that preparation for the unexpected is key to survival in production agriculture. Case in point is the coronavirus pandemic. In 2019 during the 2020 DMC enrollment period, the margin projections forecasted no indemnity payments well into 2020. Then COVID-19 hit, and market volatility ensued triggering multiple DMC payments. Unfortunately, because producers relied on the 2020 pre-pandemic margin projections, approximately 10,000 fewer dairy operations enrolled in DMC for 2020 than had enrolled the previous year.

DMC triggered seven payments in 2019 and so far, four payments have triggered for the 2020 program year. New York producers have received 11 DMC payments totaling more than $36,000,000 for 2019 and 2020 program years combined.

To date, New York has 250 dairy operations currently enrolled in DMC for the 2021 program year. Although there is still time to enroll, please give FSA a call now to avoid the last-minute rush.

DMC offers flexible coverage level options, starting at the $4.00 catastrophic level of coverage with no premium fee. From there, producers can choose to buy-up coverage where the premium is based on margin triggers between $4.50 and $9.50 on 5 to 95 percent of established production history.

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