Dairy Margin Protection Program update
The Agricultural Act of 2014 (2014 Farm Bill) authorizes the Margin Protection Program for dairy producers (MPP-Dairy). This new voluntary risk management program replaces the Milk Income Loss Contract (MILC) program which expires on September 1, 2014. MPP-Dairy offers protection to dairy producers when the difference (the margin) between the all-milk price and national average feed cost falls below a certain producer selected amount.
Eligible producers may purchase coverage for their dairy operations by paying an annual administrative fee of $100, and a premium as applicable, for higher levels of coverage. Producers in the dairy operation will have to select a desired coverage level ranging from $4.00 to $8.00, in $0.50 increments, and a desired coverage percentage level ranging from 25 to 90 percent, in 5 percent increments. Producers in the dairy operation will also have to decide whether or not to participate in the MPP-Dairy Program or the
Livestock Gross Margin program administered by the Risk Management Agency, but will not be allowed to participate in both. However. FSA is working on a process to allow maximum flexibility for dairy producers to make that decision.
Dairy operations will establish their production history upon initial registration for the MPP- Dairy program. Production history will be established for a dairy operation based on the highest annual milk production marketed during the full calendar years of 2011, 2012, or 20 13. New dairy operations in operation for less than a year will either have their production established on their available full months marketed milk production extrapolated to a yearly amount or their estimated actual marketed milk production based on the actual herd size of the dairy operation relative to the national rolling herd average.
Verification of the production records used to establish the production history for the dairy operation will be required. Payments under the program will be triggered when margins fall below their producer selected levels.
The regulations for MPP-Dairy are still being developed. Please watch for additional information about this program as it becomes available.
The following schedule may be used for your planning purposes:
- Now… Producers should obtain milk marketings for calendar years 2011, 2012, and 2013.
- Sept 2014… Decision Tool will be made available to help make coverage level decisions.
- Fall 2014… When announced by FSA, enroll in 2014 and/or 2015 MPP-Dairy program.