USDA Launches Dairy Insurance Program

USDA Launches Dairy Insurance Program

The USDA is continuing to announce details of programs authorized in the new Farm Bill. On Thursday, it unveiled details of the new dairy insurance program. The Dairy Margin Protection Program was a compromise between the House and Senate. House Republicans wanted a more market-oriented dairy program, while Senate Democrats wanted an income protection program.  So the Farm Bill contains two dairy programs: one that deals with supply, and one that provides revenue insurance. The program announced by Secretary of Agriculture Tom Vilsack addresses the latter, “The voluntary program, provides financial assistance to participating farmers when the margin – the difference between the price of milk and feed costs – falls below the coverage level selected by the farmer.”

Dairy producers will have only one opportunity to sign up for the program beginning next month.  “Sign-up will begin September 2 and run through November 28 to enroll,” Vilsack said during a press conference in Vermont.

The Secretary said the program is designed to help small- and medium-sized dairy operations deal with and survive when feed costs go higher or milk prices go lower, “When feed costs go higher because of a drought or the price of milk goes down because of oversupply, this program speaks to that ratio.” Currently milk prices are high and feed prices are low, but Vilsack this insurance program will protect dairy farmer income when this situation reverses.

The U.S. Department of Agriculture (USDA) also launched a new Web tool to help producers determine the level of coverage under the Margin Protection Program that will provide them with the strongest safety net under a variety of conditions. The online resource, available at www.fsa.usda.gov/mpptool, allows dairy farmers to quickly and easily combine unique operation data and other key variables to calculate their coverage needs based on price projections. Producers can also review historical data or estimate future coverage based on data projections. The secure site can be accessed 24 hours a day, 7 days a week via computer, Smartphone, tablet, or any other platform.

The Margin Protection Program, which replaces the Milk Income Loss Contract program, gives participating dairy producers the flexibility to select coverage levels best suited for their operation. Enrollment begins September 2 and ends on November 28, 2014, for 2014 and 2015. Participating farmers must remain in the program through 2018 and pay a minimum $100 administrative fee each year. Producers have the option of selecting a different coverage level during open enrollment each year.

Dairy operations enrolling in the new program must comply with conservation compliance provisions and cannot participate in the Livestock Gross Margin dairy insurance program. Farmers already participating in the Livestock Gross Margin program may register for the Margin Protection Program, but the new margin program will only begin once their Livestock Gross Margin coverage has ended.

The 2014 Farm Bill also established the Dairy Product Donation Program. The program authorizes USDA to purchase and donate dairy products to nonprofit organizations that provide nutrition assistance to low-income families. Purchases only occur during periods of low dairy margins. Dairy operators do not need to enroll to benefit from the Dairy Product Donation Program.

For details contact your local FSA office.