April 13, 2016
USDA expands safety-net for dairy operations
US Agriculture Secretary Tom Vilsack has announced that dairy farms participating in the Margin Protection Program (MPP) can now update their production history when an eligible family member joins the operation.
The voluntary programme, established by the 2014 Farm Bill, protects participating dairy producers when the margin – the difference between the price of milk and feed costs – falls below levels of protection selected by the applicant.
"This change not only helps to strengthen a family dairy operation, it also helps new dairy farmers get started in the family business, while ensuring that safety net coverage remains available for these growing farms," said Vilsack. "When children, grandchildren or their spouses become part of a dairy operation that is enrolled in MPP, the production from the dairy cows they bring with them into the business can now be protected. By strengthening the farm safety net, expanding credit options and growing domestic and foreign markets, USDA is committed to helping American farming operations remain successful."
The USDA''s Farm Service Agency (FSA) published a final rule which makes these changes effective on April 13, 2016.
Any dairy operation already enrolled in the Margin Protection Program that had an intergenerational transfer occur will have an opportunity to increase the dairy operations production history during the 2017 registration and annual coverage election period.
For US$100 a year, dairy producers can receive basic catastrophic protection that covers 90% of milk production at a US$4 margin coverage level.
For additional premiums, operations can protect 25% to 90% of production history with margin coverage levels from US$4.50 to US$8, in 50 cent increments.
Annual enrollment in the programme is required in order to receive margin protection. The final rule also provides improved risk protection for dairy farmers that pay premiums to buy-up higher levels of coverage by clarifying that 90% of production is covered below the US$4 level even if a lower percentage was selected above the US$4 margin.
Earlier this year, FSA gave producers the opportunity to pay their premium through additional options including via their milk cooperative or handler. This rule facilitates those options and also clarifies that the catastrophic level protection at US$4 will always cover 90% of the production history, even if a producer selected a less than a 90% percentage for the buy-up coverage.
Assuming current participation, had the Margin Protection Program existed from 2009 to 2014, premiums and fees would have totaled US$500 million while providing producers with US$2.5 billion in financial assistance, nearly US$1 billion more than provided by the old Milk Income Loss Contract programme during the same period.