FAQ: USDA's new Dairy Margin Protection Program enrollment deadline has been extended to December 19. How does it work? If milk prices fall and feed costs rise and put producers in a financial loss situation, what assistance does this safety net coverage provide?
Answer: John Whitaker is state executive director for USDA's Farm Service Agency in Iowa. He offers the following explanation of the new dairy MPP program.
In modern agriculture, there is much we can control, but two dynamics remain beyond our reach: weather and markets. The unpredictability of both, and sudden changes in either, can disrupt any family farming operation. Dairy producers know these dynamics firsthand. The 2014 Farm Bill provides a safety net, in the form of the new Margin Protection Program for dairy, so that when unforeseen swings in markets occur, dairy producers are better protected and family businesses remain strong.
The Margin Protection Program for dairy, which replaces the Milk Income Loss Contract program, was created by the new Farm Bill to shield against when the margin—the difference between the price of milk and feed costs—falls below the levels of coverage selected by participating dairy producers.
Visit your FSA office to enroll before Dec. 19
However, this safety net is not automatic. You must visit your Farm Service Agency office to enroll before Dec. 19 to lock in these protections through 2018. For just $100 you can cover 90% of your production at $4 margin swings; and with affordable incremental premiums, you can cover $8 margin swings. In fact, if you enroll this year, you will even receive a slight increase in production protection that won't be available in the future. It's a small step to take to ensure your business is covered.
If you're not sure how the Margin Protection Program works or what it will mean for your operation, USDA's online resource can help. Go to www.fsa.usda.gov/mpptool, type in your specific operation data and explore price projections and market scenarios to determine what level of coverage is best for you. You can also compare the data to see how the program would have helped in previous years like 2008 when margins dropped from $8 to $3 in just three months. This online resource is on a secure website that can be accessed from your computer, mobile phone or tablet, 24 hours a day, seven days a week.
FSA wants your feedback and opinion on this program
You also have a chance to share your comments with USDA and help shape the Margin Protection Program for the future. When dairy farmers bring new family members into the business, changes in succession could affect safety net coverage. If USDA's current rules hinder intergenerational changes or if improvements are needed in programs, USDA wants to hear from dairy producers.
According to statistics, more than 90% of dairy farms are family-owned and operated, often by multiple generations. USDA is committed to supporting family farmers and creating strong opportunities for the next generation of dairy farmers. But USDA needs to hear from you about what you think is the best way to make the Margin Protection Program work for farming families. Likewise, USDA is also seeking public comments on the Dairy Product Donation Program.
USDA is accepting public comments until Dec. 15
Submit your comments to USDA/FSA via the regulations.gov website or send them mail to: Danielle Cooke, Special Programs Manager, Price Support Division, FSA, USDA, STOP 0512, 1400 Independence Ave. SW., Washington, DC, 20250-0512. Comments will still be accepted until Dec. 15, 2014.
Don't wait to enroll, do it now. Today's market conditions are strong, but as previous years have shown, markets can turn on a dime, costing you so much more if you don't have a safety net to protect you. To learn more about the Margin Protection Program for dairy, contact your local USDA/FSA county office or visit us on the web.