Dairy cattle

More than 5,300 dairy farmers have signed up for the new Dairy Margin Coverage program available from USDA.

Signup for the new Dairy Margin Coverage program opened June 17, and a top USDA official says he is pleased with the interest producers are showing in the insurance plan.

DMC protects a margin between milk prices and feed costs and allows producers to obtain coverage from the no-cost $4 margin level.

It improves upon its predecessor, the Margin Protection Program, by offering higher margin levels at lower premiums on the first 5 million pounds of milk production history. It also offers more flexibility for larger producers on the balance of their production.

USDA is fielding a lot of questions, and more than 5,300 producers have already signed up, Bill Northey, USDA undersecretary for farm production and conservation, said in a media teleconference on June 27.

Most of the signups are in top dairy states such as Wisconsin, New York, Pennsylvania, Minnesota and Michigan. USDA is also seeing good participation in California, although fewer producers than in the other big dairy states, he said.

“I think we’re seeing a broad range of interest and a broad range of engagement,” he said.

Most people, 98% of those signing up so far, are participating at the new $9.50 margin available on the first 5 million pounds of production. Participation is retroactive to Jan. 1. Indemnity payments at that level have already been determined for the first four months of the year and will more than cover the premium for this year, he said.

Most of the enrolled 1,000 producers with more than 5 million pounds of production are electing the $4 margin for the balance of their enrolled production. About 900 chose the $4 level and 100 insured the $5 margin, he said.

Producers can receive a 25% discount on their premium if they lock in coverage for five years, and about 2,600 have done that, he said.

Producers who paid MPP premiums in excess of indemnity payments will receive reimbursement on a portion of those payments. They can choose to receive 50% of the repayment in cash or apply 75% to DMC premiums.

Those repayments total $70 million. So far, about 3,000 producers have used some of their credit to pay the DMC premium. Those credits total almost $14 million.

An earlier estimate showed about 1,400 other producers have elected cash repayments of just under $5 million, he said, so there are still a lot of producers who haven’t yet decided.

USDA estimates the number of dairy producers at about 40,000. Participation in MPP in 2018 was 21,000, and the agency hopes DMC participation will exceed that, he said.

“It’s a great opportunity for producers to be able to participate in a program that not’s going to solve all of the challenges that our dairy producers are facing out there but offers a little bit of support in a very challenging time,” he said.

Last year, a lot of producers waited until the end of the MPP signup period to enroll, he said.

Signup closes Sept. 20.

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