by Elizabeth A. Tomlin
Calling all dairies! Large or small, conventional or organic! An opportunity to lower your risk is at your fingertips with the recently implemented, 2019 Dairy Margin Coverage (DMC) program.
“June 17 was the beginning of the DMC sign-ups,” said Madison County, Farm Service Agency (FSA) County Executive Director, Donna W. Purdy. “We were very, very busy in our office.”
“All dairy farms are literally guaranteed to get payments in excess of the new lower premiums with the new Dairy Margin Coverage program,” explained Cornell Cooperative Extension (CCE) Dairy Management Specialist, Dave Balbian. “The DMC program is one of those no-brainer programs for 2019.”
Balbian and CCE Farm Business Management Specialist, Nicole Tommell, joined county FSA executive directors and CCE county office educators around the state to educate dairy producers on the new program.
During the Sherburne, Chenango County, DMC meeting, Chenango, Sullivan and Delaware counties’ FSA Executive Director, Brian Sheridan, and Purdy, answered questions and provided an FSA/ DMC/ Dairy-RP/LGM live webinar.
Sheridan said the program is geared to each producer’s specific operation based on each farm’s history, with options available.
A 5-year option, which provides a 25-percent discount on premiums, is offered. This option, although locking in production history, could save farms several thousand dollars in premium payments.
A ‘decision tool’ has been developed by the Program on Dairy Markets and Policy, with input from dairy economists from California, New York, Michigan, Minnesota, Ohio, and Wisconsin.
This tool helps individual farms decide what options would be most beneficial for them. FSA officers are able to help farmers understand how this works.
The new program offers two tiers of coverage.
Balbian explained, “The main differences are being able to select a higher margin $9.50 vs. $8 in the past. Premiums are also lower. Above 5-million pounds, producers will have the option to select a different coverage level,” said Balbian. “The catastrophic coverage level ($4) is free. This will allow large dairies to now economically participate in the program.”
This is a retroactive program providing producers guaranteed income upon enrollment.
“This is guaranteed money for dairy farmers,” said Balbian. “By selecting the $9.50 margin at 95-percent of their production base, dairy producers are virtually guaranteed a very positive return above the premium due. That is because it’s retroactive to Jan. 1. That being the case, we already know what it’s going to pay for the first several months of the year. It’s a guaranteed positive benefit. You can’t lose for 2019 if you select the $9.50 margin at 95-percent of your production base.”
Reportedly, dairy producers who have enrolled in the DMC program will be receiving their first retroactive payment beginning almost immediately.
Balbian also informed attendees that it had just been announced that a higher grade of alfalfa will be added to the DMC formula. “That will mean higher payments for this program,” he remarked.
Reimbursements may be coming to farms for premiums paid under the previous Margin Protection Program. Seventy-five percent of this reimbursement can be applied towards the new DMC program premiums, or collected at 50 percent of the reimbursement amount in cash.
Several methods of coverage are available in combination with other insurance programs. For instance, farms may enroll in both DMC and Livestock Gross Margin-Dairy (LGM-Dairy) insurance program with coverage on the same milk, or they can enroll in DMC and Dairy Revenue Protection (DRP) insurance for coverage of the same milk. Another option is enrollment in LGM-Dairy and DRP, but not for the same milk.
Purdy said the DMC program is the newest risk management tool for dairy producers.
“Producers should consider the benefits to having protection for low milk prices and/or high feed costs,” said Purdy. “The major differences between the Margin Protection Program and the Dairy Margin Program is that the percentage of coverage can be as low as 5-percent and can increase in 5-percent increments up to 95-percent, and margins have been added for $8.50, $9 and $9.50.”
Purdy points out that this allows producers more options in managing their risks.
Tommell recognized that FSA had teamed up with Dr. Jenny Ifft and Jerzy Jaromczyk of the Dyson School at Cornell to bring this information to dairy farmers.
“Remember,” emphasized Tommell, “this is for all dairy producers that are shipping milk — conventional and organic.”
Farmers have until Sept. 20 to make their choices.
Contact your county Farm Service Agency for more information.