Revised Margin Protection Program May Give Dairies Lifeline

It’s not going to save Wisconsin dairies staring into the ugly face of bankruptcy – but it may be a lifeline for others now that revisions have been completed to the Margin Protection Program (MPP).  The MPP was designed as a safety net for dairy farms when milk prices tumbled and feed prices escalated.  Current milk prices are triggering payments under that program, and now revisions completed in Washington may make the level of coverage dairy farms select more affordable.

Dr. Mark Stephenson, dairy economist at the Center for Dairy Profitability on the UW-Madison campus, was one of the contributors to the initial composition of the original MPP.  In a conversation with Pam Jahnke and the WI Farm Report Radio Network Tuesday, he said he thinks the revised program may give some returns to struggling dairies.

The program protects dairy producers by paying them when the difference between the national all-milk price and the national average feed cost (the margin) falls below a certain dollar amount elected by the producer.

Changes include:

  • Calculations of the margin period is monthly rather than bi-monthly.
  • Covered production is increased to 5 million pounds on the Tier 1 premium schedule, and premium rates for Tier 1 are substantially lowered.
  • An exemption from paying an administrative fee for limited resource, beginning, veteran, and disadvantaged producers. Dairy operators enrolled in the previous 2018 enrollment period that qualify for this exemption under the new provisions may request a refund.

Dairy operations must make a new coverage election for 2018, even if you enrolled during the previous 2018 signup period. Coverage elections made for 2018 will be retroactive to January 1, 2018. All dairy operations desiring coverage must sign up during the enrollment period and submit an appropriate form (CCC-782) and dairy operations may still “opt out” by not submitting a form. All outstanding balances for 2017 and prior years must be paid in full before 2018 coverage is approved.

Dairy producers can participate in FSA’s MPP-Dairy or the Risk Management Agency’s Livestock Gross Margin Insurance Plan for Dairy Cattle (LGM-Dairy), but not both.