Dairy Risk Management & Farm Bill

Dairy Risk Management

Dairy farmers have a wide range of risk management tools available to help deal with the increased volatility of milk prices and feed costs. Options have increased in recent years, with more affordable premiums for the dairy Margin Protection Program (MPP); greater access for dairy producers to the Livestock Gross Management (LGM) program; and the introduction of the new Dairy Revenue Program (DRP). This page provides an overview of the leading national programs available through the U.S. Department of Agriculture.

Dairy Margin Coverage

The dairy Margin Protection Program (MPP-Dairy) was developed by NMPF through a lengthy, detailed and deliberative process in response to the dairy industry financial crisis of 2009.

When Congress eventually enacted the program in 2014, the MPP had been amended and diluted to the extent that it fell short of providing the protection required of an effective farm safety net program.

Over the following two years, NMPF staff gathered feedback on the program from producers across the country and compiled a set of proposals to help improve the program, which was approved by the NMPF Board on March 7, 2017.

In February 2018, Congress passed a $1.3 trillion spending bill that contained several dairy-related provisions, including reforms to the MPP. Those reforms included:

  • 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

The spending package also 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 that will be especially important for larger dairy producers and can complement the MPP.

NMPF created a website, called Future for Dairy, that delves into the details of the program, provides the latest dairy economic data, and instructs producers on how to enroll.

Download the One Page Summary
Download the Three Page Summary

Margin Protection Program Explainer and Slide Deck
Dairy Margin Protection Program Online Calculator
MPP Margins: January 2007-December 2015