According to Brook Duer, staff attorney for the Penn State Law School’s Center for Agricultural and Shale Law, dairy farmers have a number of programs which can help them obtain the income and revenue protection they need.

“For many, many decades,” he explained, “dairy did not have anything. It’s not one of the traditional row crops that were at the front of the line at the beginning of the USDA’s risk management programs earlier in the 20th century.”

He added that recently, programs to assist dairy farmers in the same fashion have been playing catch up.

Duer outlined some of the program dairymen and women should be aware of.

Dairy Margin Coverage

The 2018 Farm Bill authorized the new DMC program, which is a voluntary risk management program for dairy producers. DMC replaced the older Margin Protection Program for Dairy (MPP-Dairy).

DMC continues to offer protection to dairy producers when the difference between the all-milk price and the average feed price (the margin) falls below a certain dollar amount selected by the producer. The program provides:

  • Catastrophic coverage, at no cost to the producer, other than an annual $100 administrative fee that is waived in some cases; and
  • Various levels of buy-up coverage.

Dairy Revenue Protection

Dairy Revenue Protection is designed to insure against unexpected declines in the quarterly revenue from milk sales relative to a guaranteed coverage level. The expected revenue is based on futures prices for milk and dairy commodities, and the amount of covered milk production elected by the dairy producer. The covered milk production is indexed to the state or region where the dairy producer is located.

Livestock Gross Margin

Livestock Gross Margin is a federally reinsured livestock product that provides protection against the loss of gross margin. LGM for dairy cattle provides protection against the loss of the market value of milk (less feed costs) on the targeted quantity of market milk. The policy uses futures prices to determine the expected gross margin and the actual gross margin.

LGM does not insure against death, loss, unexpected decrease in milk production or unexpected increases in feed use.

The mix of target milk marketings and target feed rations allows a producer to select feed rations and production levels that best reflect their actual production. This effectively insures the producer’s gross margin (the difference between the gross margin guarantee and the actual gross margin at the end of the 11-month insurance period).

Dairy Indemnity Payment Program

This program provides payments to dairy producers when a public regulatory agency directs them to remove their raw milk from the commercial market because it has been contaminated by pesticides and other residues.

Dairy Donation Program

Under the Daily Donation Program, eligible dairy organizations partner with nonprofit feeding organizations that distribute food to individuals and families in need. Those partnerships may apply for and receive reimbursements to cover some expenses related to eligible dairy product donations.

by Enrico Villamaino