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 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.

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 24, 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.

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

  • 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. The higher $9.50/cwt coverage will give producers a greater opportunity for assistance.
  • The feed cost formula has been improved to include dairy quality hay values, which better reflects the true cost of feeding dairy cows.
  • 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 the 2020 DMC began October 7, 2019. All dairy farmers who want 2020 coverage must visit their local USDA Service Center office to pay the annual administrative fee, which is $100 for the lowest level catastrophic coverage. Producers must visit their local office even if they locked in coverage for five years to take advantage of the 25% premium discount. USDA offers a decision tool to help in DMC planning. Enrollment runs through December 13.

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)

Frequently Asked Questions: Registration and Coverage Selection

Who is eligible to participate in the program?
Where do I sign up?
If I signed up for the dairy Margin Protection Program between 2014 and 2018, do I still need to sign up for the DMC?
When do I need to sign up?
What information do I need when I register?
What if I didn’t farm prior from 2011 to 2013, or was farming at a different location. How do I determine a production history?
Are there costs to participate in the program?
What coverage levels are available under the Dairy Margin Coverage program?
Can I receive a discount for future years of the DMC if I didn't enroll in 2019??
Once I register for the program, can I opt out?
I participate in the Livestock Gross Margin Program for dairy, and am also considering using the new Dairy Revenue Protection program. Can I use those programs, and also participate in the Dairy Margin Coverage Program?
Will producers need to have conservation programs in order to participate in Dairy Margin Coverage program?
Some USDA programs limit participation based on an individual’s adjusted gross income. Do these restrictions apply to the Dairy Margin Coverage program?
If a farm has multiple owners, can different owners select different coverage levels?
I own two dairy operations. Am I required to choose the same coverage levels for both?
What if a member of my immediate family wants to start another farm? Is he or she still eligible to participate?

Frequently Asked Questions: Production History

How is annual production history defined?
What if a dairy operation has no annual production history during 2011, 2012 or 2013?
Will annual production history increase during the life of the program?
If I decide to sell my dairy operation, can I keep or sell my production history?
What if a dairy operation closes and then reopens? How is its annual production history determined?

Frequently Asked Questions: Margin Protection Payments

How will payments be calculated under the program?
Has the feed cost formula been modified?
When will I be eligible for a payment?