The United States Department of Agriculture’s (USDA’s) Farm Service Agency (FSA) has announced that dairy producers can now enroll for 2023 coverage through the Dairy Margin Coverage (DMC) Program. The DMC safety net program from USDA helps producers manage changes in milk and feed prices. Enrollment is active through December 09, 2022.
DMC payments are triggered when the difference between the national all-milk price and the national average feed cost (the margin) falls below the producer-selected margin trigger, ranging from Tier 1 from $4.00 to $9.50, and Tier 2 from $4.00 to $8.00, calculated monthly.
“Dairy producers are the backbone of many agricultural communities across rural America,” FSA Administrator Zach Ducheneaux said. “Dairy Margin Coverage provides critical assistance to our nation’s small- and mid-sized dairies, helping make sure they can manage the numerous and often unpredictable uncertainties that adversely impact market prices for milk. This year showed why enrolling in DMC makes good business sense. Early in the year, some economists predicted that DMC would not trigger any payments for the calendar year, but then fast forward to now, when we’re starting to see payments trigger and a return on investment.”
In 2021, more than 19,000 operations enrolled in DMC and received more than $1.1 billion in payments, with an average payment of more than $62,000 paid. So far in 2022, the number of operations enrolled in DMC has fallen to 17,776 and triggered more than $47.9 million in indemnity payments for August.
For the second month in a row, DMC payments were triggered. The August DMC margin was $8.08/cwt., down $1.84 from July, thus triggering the first DMC indemnity payment for 2022 at the $9.50, $9, and $8.50 coverage levels. The September margin under the DMC program was $8.62/cwt, up by $0.54/cwt from the August margin and generating a payment of $0.88/cwt for Tier 1 coverage at the $9.50/cwt level under the program.
“The current combination of high prices with costs that can be even higher illustrates the basic value of DMC for producers who can benefit from the program,” National Milk Producers Federation (NMPF) President and CEO, Jim Mulhern said. “By calculating assistance via a margin rather than a target price, DMC offers a measure of protection against the current cost volatility that’s challenging many milk producers.”
All dairy operations in the United States are eligible for the DMC program. Check out the DMC website for more information on the program and how to apply.