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Insight USDA Launches New Dairy Insurance Program

Dairy farmers who have struggled over the past few years due to low milk prices and high feed costs can begin signing up today for a new dairy insurance program which replaces the old subsidy program (the Milk Income Loss Contract program) that failed to factor in the price of feed. The previous program paid dairy farmers when the price sank below a certain level, but did not account for feed costs applicable to the dairy operation.

Signups for the Margin Protection Program for Dairy Producers (MPP-Dairy) administered by the Farm Service Agency (FSA) will run September 2 to November 28 as recently announced by Tom Vilsack, the U.S. Agriculture Secretary. Dairy farmers must enroll in order to participate in the program for the remainder of 2014 and 2015 and will remain in the program through 2018. The FSA has also opened a 60-day public comment period for the program with particular interest in whether the current regulations accurately address management changes, such as adding new family members to the dairy or operation or inter-generational transfers. Written comments must be submitted by October 28, 2014 at www.fsa.usda.gov. Participation in MPP-Dairy requires dairy operators to comply with conservation compliance provisions. Further, dairy operators who participate in MPP-Dairy cannot simultaneously participate in the Livestock Gross Margin dairy insurance program. Current participants in the Livestock Gross Margin program can register for MPP-Dairy, but the new margin program will only begin once their Livestock Gross Margin coverage has ended.

The MPP-Dairy program allows dairy farmers to purchase catastrophic coverage for $100 per year which would pay the difference between milk prices and feed costs if the feed cost to milk ratio sank below $4 per hundred pounds of milk on average. Dairy farmers may purchase additional coverage (larger margin) and pay a higher premium as well. The U.S. Department of Agriculture has an online tool to help farmers determine how much insurance they should purchase and can be found at http://www.fsa.usda.gov/mpptool.

For more information visit www.usda.gov or contact a member of our Business Group at 208.344.6000.

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