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Congress Passes Budget Deal Containing Major Improvements to Dairy Safety Net

February 9, 2018

Following months of advocacy by NMPF on Capitol Hill to improve the federal dairy program, Congress passed a two-year budget deal on Feb. 9 that will enact badly-needed improvements to the dairy safety net for milk producers. Effective immediately for the 2018 calendar year, the legislative package reforms the dairy Margin Protection Program (MPP) and provides access to additional risk management tools from the Agriculture Department (USDA). These key elements will create $1.2 billion in baseline spending for the next Farm Bill, paving the way for additional improvements to the MPP.

The MPP reforms included in the budget package include:

  • Raising the catastrophic coverage level from $4.00 to $5.00 for the first tier of covered production for all dairy farmers;
  • Adjusting the first tier of covered production to include every dairy farmer’s first five million pounds of annual milk production (about 217 cows) instead of four million pounds, a recognition of the growth in herd sizes across the country;
  • Reducing the premium rates, effective immediately, for every producer’s first five million pounds of production, to better enable dairy farmers to afford the higher levels of coverage that will provide more meaningful protection against low margins;
  • Modifying the margin calculation to a monthly (from bi-monthly) basis, to make the program more accurate and responsive to producers in difficult months;
  • Waiving the annual $100 administrative fees for underserved farmers;
  • Directing USDA to immediately reopen the program signup for 2018.

In addition to these reforms, the budget legislation lifts the $20 million annual cap on all livestock insurance, including the Livestock Gross Margin (LGM) program. This will allow USDA to develop a wider variety of additional risk management tools for dairy producers that can complement the MPP.

“This budget bill containing major improvements to the dairy safety net is an important victory for America’s dairy farmers. The enhancements to the Margin Protection Program (MPP), coupled with the expansion of additional risk management options, are coming at a crucial time for our producers. Farmers need insurance options that are both effective and affordable, and this package helps deliver on that promise,” said Jim Mulhern.

The dairy provisions are part of a disaster aid package attached to a larger spending deal needed to keep the government open after February 8. In a letter of support for the Senate bill language sent Thursday to congressional leaders, NMPF outlined the difficult economic situation facing dairy producers, including declining milk prices and global export challenges. The dairy policy changes will better help farmers weather this challenging environment, the letter said.

NMPF worked with key congressional dairy policy leaders to craft the policy changes. Sens. Patrick Leahy (D-VT) and Debbie Stabenow (D-MI) spearheaded the reforms to the MPP, which also garnered support from Sens. Thad Cochran (R-MS) and Pat Roberts (R-KS), as well as key members of the House. NMPF also thanked Reps. Mike Conaway (R-TX) and Collin Peterson (D-MN) for crafting important language to remove the existing cap on livestock insurance products, including the Livestock Gross Margin-Dairy program.

Mulhern said that NMPF’s focus will shift to the 2018 Farm Bill, adding that “we have more work ahead in the next Farm Bill, but the safety net and risk management opportunities for dairy farmers are greatly enhanced now, thanks to the passage of these changes,” he said.

In a related development, the USDA released its Farm Bill principles last month.  They start with providing an effective safety net for farmers – reflecting NMPF’s continued emphasis on its goals to fix the MPP and expand the range of risk management tools available to producers.