Dairy farmers who signed up for USDA’s Dairy Margin Coverage program can expect a payout for January if they protected a margin between milk prices and feed costs of $7.50 per hundredweight of milk or above.
Share on twitter
Share on facebook
Share on linkedin
Share on whatsapp
Share on email
USDA’s calculated margin above feed costs under the dairy margin program is $7.14 per hundredweight for January 2021. Carol Ryan Dumas/Capital Press File

USDA’s calculated margin above feed costs is $7.14 per hundredweight for January.

Of the 162.2 billion pounds of production history enrolled nationally in DMC for 2021, producers covered 48.4 billion pounds at some margin level. Of that, 95% — 46.2 billion pounds — was protected at a $9.50 margin per hundredweight, USDA’s Farm Service Agency told Capital Press.

Farm Service Agency hasn’t yet posted the January payout, which would be for 1/12 of producers’ annual covered production. At the $9.50 margin level, that accounts for about 3.8 billion pounds, or 38 million hundredweight of milk.

A payout of $2.36 per hundredweight at the $9.50 margin equates to almost $89 million.

A producer who covered 5 million pounds annually at the maximum 95% of production would have coverage for 4.75 million pounds or 47,500 hundredweight of milk. One-twelfth of that would be 3,958 hundredweight. Coverage at the $9.50 level would result in a payout of $9,342 for January.

The annual premium for that coverage, including the $100 administrative fee, is $7,225. So in January alone, that producer’s net return on the program is $2,117.

But that’s only on the first 5 million pounds of annual production, representing a herd of 200 to 250 cows.

DMC contracts for 2021 totaled 18,679. Of that, 17,899 — 95% of contracts — are at the $9.50 margin coverage level.

Total enrollment (not coverage) represents about 74% of dairy operations with production history for USDA programs and nearly 80% of established production history.

The large difference in volumes enrolled and volumes covered is most likely tied to the higher cost of premiums for annual milk production above 5 million pounds — the average U.S. production for which the program was designed.

The premium rate for $9.50 coverage on the first 5 million pounds is 15 cents per hundredweight of milk. Coverage is not available for an $8.50, $9 or $9.50 margin for production above 5 million pounds. But coverage of an $8 margin on production above 5 million pounds is $1.81 per hundredweight, compared with 10 cents per hundredweight for 5 million pounds or less.

Capital Press has filed a Freedom of Information Act request with USDA for a breakdown of coverage levels nationally and for certain western states.

Of dairies with established USDA production history in Idaho, 72% are enrolled in DMC, representing 67% of production. How much production was covered and at what margin level isn’t immediately available.

Enrollment in Washington is 79% of dairies, representing 83% of production. Enrollment in Oregon is 75% of dairies, representing 60% of production. Enrollment in California is 72% of dairies, representing 79% of production.

Last month, 14 of our dairy farms in Maine, as well as dozens of dairy farms across northern New England, got an unexpected and disappointing notice from Danone of North America saying that they were discontinuing their contracts with our organic dairy farmers in Maine, New Hampshire, Vermont and elsewhere.

You may be interested in

Deja una respuesta

Tu dirección de correo electrónico no será publicada. Los campos obligatorios están marcados con *

To comment or reply you must 

or

Related
notes

Cerrar
*
*
Cerrar
Registre una cuenta
Detalhes Da Conta
*
*
*
*
*
Fuerza de contraseña

SUBSCRIBE TO OUR NEWSLETTER