News & Resources

Margin Protection Program: New Dairy Safety Net on Track for September Launch

August 7, 2014

After years of work by NMPF and its member cooperatives, a better federal dairy program is expected to finally emerge between now and Labor Day. Barring any last-minute glitches, producers will soon be perusing the details of this new, and very different, safety net based on margins rather than just milk prices.

The Dairy Margin Protection Program will offer farmers basic insurance against 2009-type catastrophic margins for only $100 per year, and higher levels of coverage for an additional premium. 

The regulation implementing the program has moved from the Agriculture Department to the Office of Management and Budget – a key bureaucratic step – and USDA expects to have it out in time to launch the sign-up process following the Labor Day weekend.

In the meantime, local Farm Service Agency offices are getting up to speed on the program and preparing to assist farmers once the sign-up period begins. The USDA plans an August letter to farmers explaining the new program.

Many program details won’t be final until the implementing regulation is published, but NMPF has been urging USDA to make the program farmer-friendly. There will be a USDA handbook on the program, and a consortium of land-grant universities will also be helping producers calculate farm-specific margin coverage options.

NMPF will schedule webinars and will have a simple, downloadable web-based tool to help producers navigate the decision-making process. The online tool will allow farmers to plug in their own numbers and quickly and easily see the program’s potential impact.

A detailed summary of what was in the legislation that created the program can be found at www.futurefordairy.com. Following is a rundown of some of the key areas that USDA will be addressing in the final program announcement:

Registration – NMPF anticipates an initial sign-up period of approximately 90 days, probably stretching to the end of November or early December. The program will operate on a calendar-year basis. After the first year, the annual sign-up period may be moved forward from this year’s later start. It is anticipated that sign-up in 2015 and subsequent years could begin in mid- to late-summer and run to October.  Participating producers will be able to adjust their level of participation each year.

Margin calculations – USDA will use National Agricultural Statistics Service data to make the margin calculations. Margins will be averaged over specific two-month periods, starting with January-February. Preliminary margin numbers are expected to be announced mid-month, with final numbers by the end of that month. In any month in which margin payments are authorized, USDA has indicated it will try to process them as soon as possible after the final margin numbers are announced.

LGM v MPP – Producers can’t be in both programs, so they will have to pick one or the other. Initially, for those already in the Livestock Gross Management Program, USDA has announced rules to provide some flexibility.

Conservation compliance – As with other farm programs, farmers are expected to be required to comply with conservation regulations to participate in MPP.

Premiums – NMPF believes Congress intended for lower premiums to apply to the first 4 million pounds of milk enrolled by every producer for coverage under the program. NMPF has urged USDA to implement the program that way.

Ownership structures – One producer can have more than one farm, and each will be treated individually under MPP. Also, one farm can be owned by multiple producers, but USDA will need approval from all the owners to make payments.

Moving production history – If a dairy farm is sold, NMPF has recommended that the production history can either move with the farmer to a new facility or stay with the farm, but not both.

NMPF and its member co-ops will provide additional information and analysis as USDA decisions are announced.