Tag: dairy margin coverage

DMC Margin Payment Falls in April as Milk Prices Improve

Posted on by Theresa Sweeney

The April payment under the Dairy Margin Coverage program fell $0.48/cwt from March to $2.56/cwt for $9.50/cwt coverage, as higher milk prices that easily outstripped rising corn costs boosted margins. The April U.S. average all-milk price rose a full dollar per hundredweight from a month earlier to $18.40/cwt, while the April DMC feed cost calculation was $0.52/cwt higher, due almost entirely to a higher corn price.

Current futures prices indicate that the DMC program margins will continue to rise at a moderate pace, thus reducing monthly payments, and surpass $9.50/cwt by late summer. USDA reported last week that as of May 24, estimated DMC payments for this year have exceeded $344 million.

DMC Margin Rises in March

Posted on by Theresa Sweeney

The March margin under the federal Dairy Margin Coverage Program rose $0.24/cwt above February’s to $6.46/cwt, with forecast for future margin’s indicating that February may have been the year’s low.

The March U.S. average all-milk price was $17.40/cwt, $0.30/cwt higher than in February, while the DMC March calculated feed cost was just $0.06/cwt higher than February’s. On a per hundredweight of milk basis, a higher corn price in March was almost entirely offset by a lower cost of soybean meal. The March payment for $9.50/cwt DMC program coverage is $3.04/cwt. On an annualized basis, the DMC program will have already paid the equivalent of $2.17/cwt for coverage at $9.50/cwt during the first quarter of 2021 alone.

Current futures prices indicate that the DMC program margins going forward may remain below $9.50/cwt until late summer, as rising milk prices compete with higher costs for corn and hay. USDA reported that 164.7 billion pounds of production history, or 79.4 percent of the total, was enrolled in the 2021 DMC program, with an estimated $223 million in payments for disbursement as of April 19.

DMC’s January Payout Exceeds Annual Premium Costs

Posted on by Theresa Sweeney

The margin in January for the Dairy Margin Coverage program, the main federal dairy safety-net initiative, was $7.14 per cwt, down from $8.78 per cwt in December. That generated a payment of $2.36 per cwt for $9.50 per cwt coverage for January – which, by itself, was already more than enough to repay the full cost of signing up for the program at the maximum coverage level for the entire year.

The January all-milk price dropped another dollar from December to $17.50 per cwt. Meanwhile, the remaining $0.64 per cwt monthly drop in the margin was generated almost entirely by increases in corn and soybean meal costs. The one-month increase in the margin’s feed cost was the highest for the DMC as well as for its predecessor, the Margin Protection Program, which was initiated in 2014.

With current futures prices indicating that the all-milk price won’t rise above January’s level for several months and that corn will keep rising and soybean meal will not get much cheaper over the same period, the program is expected to generate substantial payments in 2021.

November DMC Margin Above Assistance Threshold; 2021 Payments Expected

Posted on by Theresa Sweeney

The monthly margin for November under the Dairy Margin Coverage (DMC) program was $11.87 per cwt, the second-highest monthly margin of 2020. Margins are still expected to fall in 2021, with levels that trigger federal assistance payments for much of the year.

The November U.S. average all-milk price was $21.30 per cwt, the highest of all 2020 monthly milk prices, but that month’s DMC feed-cost calculation was $9.43 per cwt of milk, also the year’s highest. The highest margin in 2020 – and the highest since November 2014 – was $12.41 per cwt in July, when the all-milk price was $20.20 per cwt, but the feed cost was just $8.09 per cwt.

High margins and prices are expected to be distant memories for the foreseeable future, according to current dairy futures. Milk prices are not anticipated to rise much above $18.00 per cwt, with DMC margins projected to remain well below $9.50 per cwt, at least through next summer. Growth in dairy cow numbers and milk production are accelerating. Meanwhile, the COVID-19 pandemic is expected to keep food service use of dairy depressed for some time, and the outlook for continued USDA food purchases does not currently appear able to be fully adequate to bridge this growing gap between milk and supply and demand.

The cost side is also expected to be challenging: Increased prices of corn and soybean meal are projected to boost the DMC feed cost calculation well above $10.00 per cwt during this same forecast horizon.

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

NMPF Thanks Congress for Dairy Provisions in COVID Assistance Package

Posted on by Theresa Sweeney

The National Milk Producers Federation (NMPF) thanked Congress today for the positive steps it is taking through COVID relief legislation to assist dairy farmers who have faced unprecedented market volatility while working every day to nourish struggling families.

“With difficult months of the pandemic still ahead, it was crucial for lawmakers to come to a bipartisan agreement that helps farmers do what they do best: feed families. To do this, they need financial stability and ways to connect to families in need. We thank Congress for its leadership, and we look forward to working with USDA in implementing this legislation. Importantly, this package includes nearly $1 billion in targeted support to help dairy producers continue to feed families throughout these difficult times,” said Jim Mulhern, NMPF president and CEO.

Highlights of the pandemic legislative package for dairy producers include:

  • Dairy Donation Program – the measure provides $400 million for a new NMPF-backed Dairy Donation Program to help dairy stakeholders and non-profits work together to provide dairy products to food-insecure households and minimize food waste. This program is carefully balanced and is open to all dairy products. NMPF is grateful to Senator Debbie Stabenow (D-MI) and Rep. Collin Peterson (D-MN) for their leadership in securing this and other dairy provisions in the package.
  • Payment Limits Flexibility – the bill includes dedicated funding to allow USDA to provide additional compensation to producers who were unable to receive the full support they needed under the Coronavirus Food Assistance Program on account of payment limitations. NMPF thanks Rep. Mike Conaway (R-TX) for advocating for this provision, as well as the many members who have sought flexibility on this front all year long including Sens. Jerry Moran (R-KS) and Dianne Feinstein (D-CA) and Rep. Jim Costa (D-CA).
  • Supplemental DMC Payments – the measure establishes Supplemental Dairy Margin Coverage payments for farms that have increased their DMC production history since 2014. These payments will be based on the difference between the farm’s 2019 actual production and its DMC production history. While the provision is targeted to smaller operations, it will enhance the farm bill baseline for all dairy farmers as it runs concurrently with DMC up to 2023.
  • Paycheck Protection Improvements – the bill includes the bipartisan NMPF-backed Paycheck Protection for Producers Act which would make the Paycheck Protection Program work better for sole proprietor, independent contractor, and self-employed dairy farmers by allowing them to use their 2019 gross farm income to determine their PPP loan amounts. NMPF commends Sens. John Thune (R-SD) and Tammy Baldwin (D-WI) and Reps. Ron Kind (D-WI), Glenn ‘GT’ Thompson (R-PA), Anthony Brindisi (D-NY), and John Joyce (R-PA) for their work on this measure.

Dairy producers will also be eligible for support in the $11 billion agricultural disaster assistance package Congress has included in the legislation, with additional details expected in coming days. Of note, at least $1.5 billion of this package is dedicated to additional product purchases.

NMPF has served its members as the leading advocate for U.S. dairy farmers throughout the coronavirus pandemic. It has also been an industry leader in providing useful informational resources for the dairy sector.

Podcast: Sen. Pat Roberts on His Past and Agriculture’s Future

Posted on by Theresa Sweeney

Senate Agriculture Committee Chairman Pat Roberts is leaving Congress after 40 years in January. The only person to lead both the House and Senate agriculture committees takes with him a wealth of wisdom in agriculture policy – but also holds optimism for agriculture’s ability to get things done in an environment of difficult challenges.

“I would just say that I am very confident that the people who will be taking my place, they have a lot of experience,” Roberts said in a Dairy Defined interview released today. “They’re good folks. I think the same attempt, at least, with regards to making it bipartisan, will continue.”

Roberts, who first came to Washington as a congressional staffer a half-century ago, also reflects on the two farm bills he led — 1996’s Freedom to Farm law and the 2018 bill — as well as one area where he wished he could have done more: his leadership of the Senate Intelligence Committee during the Iraq War. He also said he doesn’t consider his career to be over – without revealing plans, he said that when it comes to farm policy, “I intend to have my finger in the pie somewhere.”

To listen to the full discussion, click here. You can also find this and other NMPF podcasts on iHeartRadio, Apple Podcasts, Spotify,  SoundCloud and Google Play. Broadcast outlets may use the MP3 file. Please attribute information to NMPF.

On Final Day, NMPF Urges Dairy Farmers to Sign Up for DMC

Posted on by Theresa Sweeney

The National Milk Producers Federation (NMPF) is urging dairy farmers to sign up for 2021 coverage under the Dairy Margin Coverage (DMC) program if they haven’t yet done so, as today is the final day producers may enroll in the main federal dairy-farmer risk-management program. NMPF is advising any producer who wants to enroll in DMC for 2021 to contact their local Farm Service Agency office by the close of business today to at least notify them of intent to enroll.

“Given the current economic outlook and the heightened uncertainties of 2021, DMC signup, especially at the maximum $9.50 coverage level, is the rational choice for dairy producers,” said Jim Mulhern, NMPF President and CEO. “But to take advantage of this program, farmers need to sign up now.”

The DMC, the main federal risk-protection tool for dairy farmers, is currently projected to pay all producers enrolled at the maximum $9.50/cwt. coverage level through much of 2021. The program, which by year’s end may end up with payments for five months of 2020, offers protection against volatile market conditions that are expected to persist well into next year.

NMPF has produced an easy-to-digest brochure highlighting the benefits of DMC coverage and an explanation of how the program works. Dairy producers can also visit NMPF’s page on risk management to learn more about DMC and other tools to promote financial security for dairy operations.

Today is also the signup deadline for the second round of Coronavirus Food Assistance Program disaster payments.

NMPF Celebrates Rep. Glenn Thompson’s Election as Ranking Member of House Agriculture Committee

Posted on by Theresa Sweeney

The National Milk Producers Federation today congratulated Representative Glenn ‘GT’ Thompson (R-PA) on being elected by his colleagues to serve as the Ranking Member of the House Agriculture Committee in the 117th Congress. Rep. Thompson is the descendant of a long line of dairy farmers and been a champion of dairy producers on the House Agriculture Committee since coming to Congress in 2009.

“We have enjoyed working with Congressman Thompson and his team for years. GT has been a vocal and effective advocate for the needs of dairy farmers in Pennsylvania and throughout the country,” said Jim Mulhern, NMPF president and CEO. “He also has a keen understanding of the need to build a vibrant rural economy to sustain a safe, abundant, and affordable food supply to nourish our country and our planet.”

During his time in Congress, Rep. Thompson has played a critical role in enacting bipartisan policies that create an effective climate for dairy farmers and their cooperatives to produce safe, healthy dairy products in an environmentally sustainable manner. As Vice Chairman of the Agriculture Committee, GT worked with his colleagues to secure much-needed dairy policy reforms, culminating in the Dairy Margin Coverage program created in the 2018 Farm Bill.

Congressman Thompson served as Chairman of the Conservation and Nutrition Subcommittees during the writing of the last two farm bills. He has championed bipartisan legislation to improve the effectiveness of farm bill conservation programs and to enhance consumption of nutritious dairy products. In addition, GT has been a vocal advocate for expanding markets for all farmers, helping to push through the US-Mexico-Canada Agreement last year.

“Congressman Thompson’s bipartisan record of achievement speaks for itself, and we are eager to work with him to build on that record as he assumes his new role,” said Mulhern. “We congratulate GT on his appointment as Ranking Member and know he will continue to be a leading voice in the House for dairy and all of agriculture.”

NMPF featured Rep. Thompson on its Dairy Defined podcast earlier this year. The full interview is available here.

Reminder: NMPF Dairy-Economy Webinar Today; DMC Brochure Available

Posted on by Theresa Sweeney

To better inform the dairy community of what it should expect from next year’s economy as well as what risk-management options are available, the National Milk Producers Federation is offering a free webinar today at 1:30 EST to help them develop effective risk management plans that can protect them in what’s predicted to be a volatile 2021. Registration is here.

NMPF Chief Economist Peter Vitaliano will discuss the dairy price outlook for next year and the value of risk management tools, including Dairy Margin Coverage, in the webinar moderated by Chris Galen, NMPF’s Senior Vice President for Member Services. Participants will be able to ask questions about the year ahead and learn more about how farmers can manage their risk through expected turbulence.  The webinar will examine the milk and feed price forecast, forecast margins, and analyze how the Dairy Margin Coverage program will offer farmers protection against price volatility.

The deadline for DMC signup, as well as signups for the latest round of the Coronavirus Food Assistance Program, is Dec. 11. The DMC also offers affordable protection to all producers against price catastrophes and can be used in tandem with other risk management tools, such as the Dairy-Revenue Protection and the Livestock Gross Margin programs. NMPF has also produced an easy-to-digest brochure highlighting the benefits of DMC coverage and an explanation of how the program works. Dairy producers can also visit NMPF’s page on risk management to learn more about DMC, CFAP and other tools to promote financial security for dairy operations.