Tag: DMC program

NMPF Secures Continued DMC Production History Boost in Farm Bill Extension

Posted on by Theresa Sweeney

NMPF worked closely with the House and Senate Agriculture Committees last month to finalize a one-year farm bill extension that was signed into law Nov. 17 as part of a larger government funding bill.

The extension continues the successful Dairy Margin Coverage program for 2024. At NMPF’s urging, it also incorporates the 2019 partial production history update, previously known as Supplemental DMC, into the underlying DMC safety net.

Through 2023, Supplemental DMC offered payments to those producers whose DMC production history was below five million pounds, but whose actual production had increased to that level by 2019. Eligible farmers received payments totaling 75 percent of the difference between their actual 2019 production and their DMC production history. Enactment of the farm bill extension now converts this supplemental program into a base production history update within DMC, ensuring it will continue going forward without requiring a separate extension.

Congress’s move also funds those programs that did not have a budget “baseline” to ensure that they would be funded into the next farm bill. This includes the Foundation for Food and Agriculture Research, which was created in the 2014 Farm Bill with NMPF’s support to leverage both private and public resources to maximize agricultural research needs.

NMPF thanked congressional leaders for their work on the extension and reinforced the importance of passing a five-year farm bill as soon as possible. “We commend House and Senate Agriculture Committee Chairs Glenn Thompson and Debbie Stabenow, as well as Ranking Members David Scott and John Boozman, for their bipartisan work to finalize this farm bill extension as part of the congressional spending agreement President Biden signed today,” NMPF president and CEO Jim Mulhern said in a statement. “With this bill passed, we stand ready to work closely with the House and Senate Agriculture Committees to deliver a strong, five-year farm bill as swiftly as possible.”

DMC Margin Drops Below $6 in April

Posted on by Theresa Sweeney

The April Dairy Margin Coverage (DMC) margin dropped by $0.25/cwt from a month earlier to $5.84/cwt, the first time the margin fell below $6 since August 2021. The April all-milk price was $20.70/cwt, down $0.40/cwt from March, while the DMC feed price was down for the month by $0.15/cwt, due entirely to a lower soybean meal price. The April payment for maximum Tier 1 coverage at the $9.50/cwt level will be $3.42/cwt. T

Available forecasts continue to indicate that monthly DMC margins will stubbornly remain around $6 into the summer and then slowly rise during the second half of the year, not topping $9.50/cwt until November.

2022 Ends with No DMC Payments; 2023 May Be Different

Posted on by Theresa Sweeney

The December DMC margin was $9.76/cwt, down $1.13/cwt from the month before but still above the $9.50/cwt threshold for federal payments at the highest insurance level. Much of this decline was contributed by a $0.90/cwt fall in the U.S. average all-milk price, to $24.70/cwt. The DMC December feed cost rose $0.23/cwt from November, on higher corn and soybean meal prices.

The DMC margin fell below the highest coverage level of $9.50/cwt during just two months of 2022, as record high feed costs were generally topped by record high milk prices. This year’s outlook is very different, with the DMC margin currently projected to fall below $9.50/cwt every month until sometime next fall and to average around $8.00/cwt for the year.

NMPF Urges Farmers to Consider Federal Risk Management Tools as USDA Announces DMC Signup

Posted on by Theresa Sweeney

Milk Loss Disaster Program in Works

With rising costs eroding dairy margins despite high farm milk prices, the National Milk Producers Federation (NMPF) is urging farmers to sign up for maximum 2023 coverage under USDA’s Dairy Margin Coverage (DMC) program, an important component of federal dairy risk-management programs supported by NMPF.

USDA has announced that DMC signup begins today, with a deadline of Dec. 7. Despite record prices this year, accompanying record costs resulted in DMC payments for August for farmers enrolled at the maximum coverage level.

“The current combination of high prices with costs that can be even higher illustrates the basic value of DMC for producers who can benefit from the program,” said Jim Mulhern, president and CEO of NMPF. “By calculating assistance via a margin rather than a target price, DMC offers a measure of protection against the current cost volatility that’s challenging many milk producers.”

Farmers should also consider signing up for federally backed risk-management programs appropriate to their operations, Mulhern said.

DMC is designed to promote stable revenues and protect against financial catastrophe for small and medium-sized producers. It’s part of a suite of federally backed risk-management tools, including the Dairy Revenue Protection (DRP) program and the Livestock Gross Margin for Dairy Producers (LGM-Dairy) program, which were revamped in the 2018 Farm Bill at NMPF’s urging.

DMC resulted from NMPF’s effort to improve inadequate federal margin-protection insurance. LGM-Dairy and DRP were made workable via NMPF’s efforts to remove spending caps and a ban on enrollment in multiple programs, which previously limited their usefulness.

Mulhern also reminded eligible farmers who did not sign up for supplemental DMC coverage in 2022 based on updated production levels that they have another opportunity to do so this year.

NMPF also reminds producers that USDA is developing a separate milk loss program, as provided for in legislation enacted last year. This program will reimburse dairy producers of all sizes for milk dumped on account of disasters that occurred in 2020 and 2021, including, but not limited to, derechos, excessive heat, winter storms including polar vortexes, droughts, hurricanes, and wildfires. NMPF is working with USDA as it develops the initiative.

November DMC Margin Rises, Generates Smallest Payment Since 2020

Posted on by Theresa Sweeney

The November margin under the Dairy Margin Coverage program was $9.14/cwt, up $0.60/cwt. from October, as higher milk prices more than offset gains in feed costs. The new calculation will generate a payment of $0.36/cwt. for $9.50/cwt. coverage, which will be the smallest since September 2020.

The all-milk price component of the November margin was $20.80/cwt., $1.10/cwt. higher than a month earlier. The November DMC feed cost was also higher for the month, by $0.50/cwt., with nearly equal contributions from higher corn and soybean meal prices. The November premium alfalfa hay price was down slightly from a month earlier after rising steadily almost every month since September 2020.

The end-of-year dairy futures indicate a possible small payment to $9.50/cwt. coverage for December, but the current strong milk price outlook makes this questionable for future months, given the current market outlook.

Signup for the 2022 DMC program is underway and will close on Feb. 18. This year’s program has paid out $1.2 billion as of January 3, and NMPF is urging dairy farmers who haven’t yet joined the program to do so. NMPF has a page of resources for members who may have questions here.

DMC Signup to Begin; USDA, Congress Thanked for NMPF-Backed Improvements

Posted on by Theresa Sweeney

The National Milk Producers Federation is urging farmers to sign up for maximum coverage in 2022 under the Dairy Margin Coverage (DMC) program, which USDA today announced will open for enrollment from Monday, Dec. 13, through Feb. 18. This year’s DMC signup is accompanied by new enhancements that make the program even more valuable for producers seeking protection against unforeseen market risks.

“Signing up for DMC, which offers cost-effective margin protection for small and medium-sized producers as well as inexpensive catastrophic coverage for larger dairies, is a no-brainer for 2022, especially considering the improvements we fought for in Congress and advocated for at USDA,” said Jim Mulhern, president and CEO of NMPF. “This year has illustrated just how valuable this program is for those producers that can take advantage of it, and DMC will once again be an essential part of many farmers’ risk management in the coming year. We thank Congress and USDA for making the program stronger and helping dairy farmers in challenging times.”

DMC is part of a suite of federally backed risk-management tools, including the Dairy Revenue Protection (DRP) program and the Livestock Gross Margin for Dairy Producers (LGM-Dairy) program, which were revamped in the 2018 Farm Bill at NMPF’s urging. DMC resulted from NMPF’s effort to improve inadequate federal margin-protection insurance. LGM-Dairy and DRP were made workable via NMPF’s efforts to remove spending caps and a ban on enrollment in multiple programs, which previously limited their usefulness.

More than $1.1 billion – a record – in DMC payments are expected to be distributed to dairy producers under the 2021 program, according to USDA data as of Dec. 6.

While DMC in 2022 will fully incorporate the premium-quality alfalfa price into the DMC feed cost formula, an improvement from the current structure that uses a 50-50 blend between the premium-quality price and the regular price, USDA will make retroactive payments to producers to January 2020. Meanwhile, the new Supplemental Dairy Margin Coverage program will enable some producers who are also enrolled in DMC to receive additional payments reflecting increases in their production since 2014 retroactively to January 2021.

Both improvements occurred at NMPF’s urging. The alfalfa recalculation also will further benefit dairy in the next farm bill, as it will increase the amount of funds available for all programs that benefit dairy farmers.

October DMC Margin Shows Another Large Monthly Increase

Posted on by Theresa Sweeney

The October margin under the Dairy Margin Coverage program was $8.77/cwt, $1.85/cwt higher than a month earlier, as prices rose and feed costs fell. The October margin will produce a payment of about $0.73/cwt for coverage at the $9.50/cwt level. When eventually topped up with the full dairy-quality alfalfa cost figured in, this payment will rise to $0.96/cwt.

The October DMC feed cost dropped $0.55/cwt from a month earlier, mostly on a lower corn price, while the milk price rose by $1.30/cwt to $19.70/cwt. The increase was the third largest one-month increase since milk price-minus-feed cost margins were first calculated for federal dairy safety-net programs in 2014. Together with August’s increase, October’s margin rose $3.53/cwt over a two-month period.

The recent strength of milk prices is expected to continue through the end of the year, potentially ending this year’s unbroken string of margins below $9.50/cwt.