Volatility sign.
July 21, 2017

Could Changes Be Coming to 2018 Margin Protection Program?

 |  By: Jim Dickrell

The Senate Appropriations Committee tweaked the Dairy Margin Protection Program (MPP) this week, and if passed by Congress would make the program more affordable for smaller producers and increasing the likelihood that margin payments will be triggered.

Foremost, the Committee changed the margin calculation from a bimonthly to a monthly calculation, thereby increasing the likelihood of payments when either milk prices fall or feed costs rise.

It also increases the threshold for Tier I producers from 4 million lb annually to 5 million lb annually. That better aligns with the median U.S. herd size, increasing the Tier I category from about 185 cows to 223.

It would also dramatically reduce premium costs for Tier I margin levels and waive the $100 administrative fee for underserved producers. That’s similar to a fee waiver in the Noninsured Crop Disaster Assistance Program.

“Making these changes now rather than waiting for the Farm Bill next year allows USDA to implement these changes for a portion of the 2018 calendar year,” says Sen. Tammy Baldwin (D, Wis.) “If dairy farmers are forced to wait until the Farm Bill expires next fall, it is unlikely that USDA would be able to implement any of these greatly needed changes until 2020.”

The National Milk Producers Federation (NMPF) welcomed the changes. “The enhancements to the dairy MPP contained in the bill would strengthen the program and help pave the way for additional improvements in the upcoming farm bill,” says Jim Mulhern, NMPF CEO. “While there is more work to do to make the MPP the effective safety net that it was envisioned to be, these improvements are a great start.”