FAQ: Enrollment in USDA's new Dairy Farm Risk Management Program began September 2. The dairy Margin Protection Program has a new web-based tool to help producers manage unforeseen economic challenges. Explain how this new dairy program works.
Answer: The executive director of USDA's Farm Service Agency in Iowa, John Whitaker, announced on September 2, 2014 that farmers could begin to enroll in the new dairy Margin Protection Program. The voluntary program, established by the 2014 Farm Bill, provides financial assistance to participating farmers when the margin (the difference between the price of milk and feed costs) falls below the coverage level selected by the farmer.
USDA also launched a new Web tool to help producers determine the level of coverage under the Margin Protection Program that will provide them with the strongest safety net under a variety of conditions. The online resource, available at www.fsa.usda.gov/mpptool, allows dairy farmers to quickly and easily combine unique operation data and other key variables to calculate their coverage needs based on price projections.
Use online resource to calculate your coverage needs
Dairy farmers can also review historical data or estimate future coverage based on data projections. The secure site can be accessed via computer, smartphone, tablet or any other platform, 24 hours a day, seven days a week.
Development of the online resource was led by the University of Illinois, in partnership with the USDA and the Program on Dairy Markets and Policy (DMaP). DMaP partners include University of Illinois, University of Wisconsin, Cornell University, Penn State University, University of Minnesota, Ohio State University and Michigan State University.
Build a safety net to fit needs of your dairy farm
"The Margin Protection Program is an important tool that allows dairy producers to build a safety net that fits the needs of their operation," says Whitaker. "This program has the potential to assist over 1,400 dairy farmers throughout Iowa where 204,000 head of cattle produce 4.35 billion pounds of milk a year."
The Margin Protection Program, which replaces the Milk Income Loss Contract program, gives participating dairy farmers the flexibility to select coverage levels best suited for their operation. Enrollment begins Sept. 2 and ends on Nov. 28, 2014, for 2014 and 2015. Participating farmers must remain in the program through 2018 and pay a minimum $100 administrative fee each year. Producers have the option of selecting a different coverage level during open enrollment each year.
You can select coverage level at enrollment each year
Dairy operations enrolling in the new program must comply with conservation compliance provisions and cannot participate in the Livestock Gross Margin dairy insurance program. Farmers already participating in the Livestock Gross Margin program may register for the Margin Protection Program, but the new margin program will only begin once their Livestock Gross Margin coverage has ended, says Whitaker.
The Margin Protection Program final rule was published in the Federal Register Aug. 29, 2014. USDA's Farm Service Agency, which administers the program, also will open a 60-day public comment period on the dairy program. The agency wants to hear from dairy operators to determine whether the current regulation accurately addresses management changes, such as adding new family members to the dairy operation or inter-generational transfers. Written comments must be submitted by Oct. 28, 2014, at www.fsa.usda.gov or www.regulations.gov.
USDA also has a new Dairy Product Donation program
The 2014 Farm Bill also established the Dairy Product Donation Program. The program authorizes USDA to purchase and donate dairy products to nonprofit organizations that provide nutrition assistance to low-income families. Purchases only occur during periods of low dairy margins. Dairy operators do not need to enroll to benefit from the Dairy Product Donation Program.
The 2014 Farm Bill builds on historic economic gains in rural America over the past five years, while achieving meaningful reform and billions of dollars in savings for the taxpayer. For more information visit www.usda.gov/farmbill. Also, visit FSA online, or stop by a local FSA office to learn more about the Margin Protection Program or the Dairy Product Donation Program.