Dairy Risk Management & Farm Bill

Dairy Risk Management

Dairy farmers now have an improved range of risk-management tools to help them deal with the increased volatility of milk prices and feed costs. Central to dairy support is the new Dairy Margin Coverage (DMC) program, created in the 2018 farm bill, which gives farmers higher levels of assistance at more affordable prices. Farmers also have expanded access to the Livestock Gross Management (LGM) program and the Dairy-Revenue Protection (Dairy-RP) program. This page provides an overview of what the U.S. Department of Agriculture is providing, along with resources that help farmers and inform the public about the new dairy safety net.

The Improved Dairy Safety Net

The Dairy Margin Coverage program was developed as part of the 2018 Farm Bill with the assistance of NMPF as a response to the flaws of the previous Margin Protection Program, which didn’t adequately assist farmers through multiple years of low prices beginning in 2015.

As MPP’s failure became apparent, NMPF staff gathered feedback on the program from producers across the country and compiled a set of proposals to help improve the program approved by the NMPF Board on March 7, 2017.

The next step on the road to DMC came in February 2018, when Congress passed a $1.3 trillion spending bill that contained several dairy-related provisions, including adjusting the first tier of MPP-covered production to include every dairy farmer’s first five million pounds of annual milk production (about 217 cows) instead of four million pounds; reducing MPP premium rates, for every producer’s first five million pounds of production; and lifting the $20 million annual cap on all livestock insurance, including the Livestock Gross Margin (LGM) program.

DMC, the successor to the MPP, became reality last December, when President Donald Trump signed the 2018 Farm Bill into law. DMC offers further reforms, including:

  • Affordable higher coverage levels that will permit all dairy producers to insure margins above $8.00 on their Tier 1 (first five million pounds) production history, the previous limit under the Margin Protection Program. By going up to $9.50/cwt., producers will have greater opportunities for assistance.
  • Affordable $5.00 coverage that lowers premium costs by roughly 88 percent. This aids larger producers, creating a baseline for meaningful catastrophic coverage at a reasonable cost without distorting the market signals needed to balance supply with demand.
  • Greater flexibility to participate in DMC, LGM and Dairy-RP, which helps producers of all sizes choose programs that best fit their needs.

Sign-up for DMC began June 17, with payments as soon as July 8. Farmers are also receiving information about refunds of past MPP premiums, and USDA has released a decision tool to help in DMC planning.

NMPF is offering this site as a resource for producers, with additional materials giving farmers aid in making informed decisions that will help them survive tough times — and thrive in future years.

Additional resources: 

Dairy Margin Coverage Program Overview (June 20, 2019)

NMPF President and CEO Jim Mulhern explains the DMC

 

Dairy Margin Coverage

The Dairy Margin Coverage program was developed as part of the 2018 Farm Bill with the assistance of NMPF as a response to the flaws of the previous Margin Protection Program, which didn’t adequately assist farmers through multiple years of low prices beginning in 2015.

As MPP’s failures became apparent, NMPF staff gathered feedback on the program from producers across the country and compiled a set of proposals to help improve the program approved by the NMPF Board on March 7, 2017.

The next step on the road to DMC came in February 2018, when Congress passed a $1.3 trillion spending bill that contained several dairy-related provisions, including adjusting the first tier of MPP-covered production to include every dairy farmer’s first five million pounds of annual milk production (about 217 cows) instead of four million pounds; reducing MPP premium rates, for every producer’s first five million pounds of production; and lifting the $20 million annual cap on all livestock insurance, including the Livestock Gross Margin (LGM) program.

DMC, the successor to the MPP, became reality last December, when President Donald Trump signed the 2018 Farm Bill into law. DMC offers further reforms, including:

  • Affordable higher coverage levels that will permit all dairy producers to insure margins above $8.00 on their Tier 1 (first five million pounds) production history, the previous limit under the Margin Protection Program. By going up to $9.50/cwt., producers will have greater opportunities for assistance.
  • Affordable $5.00 coverage that lowers premium costs by roughly 88 percent. This aids larger producers, creating a baseline for meaningful catastrophic coverage at a reasonable cost without distorting the market signals needed to balance supply with demand.
  • Greater flexibility to participate in DMC, LGM and Dairy-RP, which helps producers of all sizes choose programs that best fit their needs.

Sign-up for DMC began June 17, with payments as soon as July 8. Farmers are also receiving information about refunds of past MPP premiums, and USDA has released a decision tool to help in DMC planning.

NMPF is offering this site as a resource for producers, with additional materials giving farmers aid in making informed decisions that will help them survive tough times — and thrive in future years.

Useful graphics

Latest DMC Margin Forecast

DMC Premiums

Other Dairy Assistance Programs

Livestock Gross Margin (LGM) Insurance
Dairy Revenue Protection (Dairy-RP)