Dairy farmers gain margin protection before new farm bill passes Congress
- Published: Monday, May 21, 2018
COLUMBIA, Mo. – A new milk price safety net for dairy producers is in place. To take part farmers must rush to their local USDA farm service center.
Milk producers must sign up for the first time or re-enroll by June 1, say University of Missouri Extension dairy economists.
Most dairy farmers don’t like the original USDA Margin Protection Program (MPP). That’s a dairy financial safety net in the current farm bill.
The margin is the difference between the milk price and the cost of making that milk.
Farmers found the safety net didn’t work, according to Joe Horner and Scott Brown, MU Extension economists. “Farmers paid premiums for a few years and got no insurance payments,” Horner said.
But MPP has changed. Congress revised MPP this spring and reopened 2018 sign-up. That closes June 1.
“Any dairy farmer who takes time to go to their Farm Service Agency can learn about the program. They will like it,” Brown said. “This helps milk producers.”
“For dairy farmers selling less than 5 million pounds of milk it’s a no-brainer,” Horner said. That’s the amount of milk from about 300 head of average Missouri dairy cows.
Producers can cover different margins. Those selecting an $8 margin for 90 percent of their milk base will receive the highest payment. “That’s a safety net,” Horner said. Another advantage is coverage goes back to Jan. 1 of this year.
The $8 level of margin insurance costs less than 15 cents per hundredweight of milk for the first 5 million pounds insured. Government payments for February and March are already known and will more than pay for a year’s insurance coverage.
“It’s like insuring your car after an accident,” Horner said.
In one option, producers don’t have to write an insurance payment check. Milk dealers will take premiums out of their monthly milk check.
There is still a $100 administrative fee. But some farmers get a waiver. That includes veterans starting to farm, and socially disadvantaged and limited-resource farmers.
FSA and MU Extension urge not waiting until the last day to sign up. A Memorial Day holiday cuts open days.
All producers must sign up, even if they are enrolled under the old program.
“I don’t know what milk prices will be at the end of the year,” Brown said. “But any drought will make feed prices go up. That shrinks margins and turns the revised MPP program into the safety new producers wanted.”
Although advisers say join, the FSA program remains voluntary.
As in any government program, there are forms to fill out first. Help is available at FSA local offices.
State FSA and MU Extension have held meetings and webinars on the new plan.
Under state leadership of Richard Fordyce, Missouri FSA has worked to make its offices farmer-friendly. Fordyce, a farmer from Bethany, Mo., has now been promoted to national FSA leadership.
There’s much to learn in the MPP, say the MU Extension specialists.
But two things are needed. Producers must know their margin they want to protect. Calculators and FSA advisers help with that.
Most important is to not miss the June 1 deadline.
Writer: Duane Dailey
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