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DMC Yields Payment for September; NMPF- Backed Alfalfa Formula Crucial

November 2, 2020

The monthly Dairy Margin Coverage (DMC) program milk price-feed cost margin for September was $9.40/cwt, which will result in payments of ten cents per hundredweight to producers who have DMC coverage at the $9.50/cwt level this year.

The September margin was $1.43/cwt lower than the August margin, resulting from a $0.90/cwt lower milk price and a $0.53/cwt higher feed cost. The September feed-cost increase, which followed mostly small but steady declines every month since March, was the largest one-month increase in the DMC feed cost since May 2016.

Higher corn and soybean meal costs helped drive the lower margins; meanwhile, a premium for high-quality alfalfa used in dairy, which NMPF in 2019 successfully advocated for inclusion in the DMC formula, contributed 14 cents more to the feed-cost calculation than would have been included under the previous Margin Protection Program, which didn’t account for high-quality alfalfa. That amount covers the entirety of the actual assistance producers will receive for September, making the advocacy win on alfalfa feed a key reason behind the payment.

The USDA-sponsored DMC Decision Tool is currently anticipating the DMC margin will rebound above the $9.50/cwt level during the remaining months of 2020 and through January next year, but then fall back below this level through at least next August.

Signup for the DMC program for 2021 coverage began October 12 and will run through December 11, 2020. Enrolling in the program for next year at the $9.50/cwt level for the first 5 million pounds of production history is strongly recommended for those operations not already signed up under the previous multi-year enrollment option.

The DMC information page on NMPF’s website offers a variety of educational resources to help farmers make better use of the program.