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December 10, 2018

Dairy Language In New Farm Bill Could Bring Money Back To Dairy Producers

Top Story  |   |  By: Mike Opperman

The Conference Committee has released the legislative language and explanatory material of the 2018 Farm Bill. The conference report renames the Margin Protection Program (MPP) as Dairy Margin Coverage (DMC) and offers significant changes and opportunities to dairy producers. Jim Wiesemeyer, Washington analyst with ProFarmer, provides updates and insights: 

Increased coverage options: The conference report adds $8.50, $9.00 and $9.50 coverage levels for the first 5 million pounds of covered milk production. Additionally, the conference report expands the range of production allowed to be covered, from 5% up to 95% of production history. 

Rewards risk management strategies: For dairy operations that choose to make a 5-year decision to lock in a coverage level and coverage percentage for the life of the 2018 Farm Bill, premium rates are reduced by 25%.

Encourages participation in revamped program. According to Wiesemeyer, recognizing MPP did not provide an adequate safety net for dairy farmers, the conference report provides dairy operations the opportunity to utilize 75% of the net premium paid for MPP from 2014-2017 as a credit for future DMC premiums. Alternatively, operations can elect to receive 50% of net premium as a direct refund.

Offers flexibility and reduces certain premiums for large operations. According to Wiesemeyer, the conference report allows dairies with covered production in excess of 5 million pounds to enroll in $8.50, $9,00 or $9.50 coverage under Tier 1 and to make an independent coverage level election in Tier II. Additionally, premiums for $5 coverage in Tier II are reduced by 88% (91% if  the premium is discounted for 5-year coverage) in an effort to make catastrophic coverage levels more affordable. 

Provides access to more risk management tools. The conference report eliminates the restriction on participating in DMC and LGM crop insurance. "This flexibility, along with the new Dairy Revenue Protection (Dairy-RP) insurance policy developed by the American Farm Bureau Federation, will provide multiple options to address risk for dairy farmers," Wiesemeyer says.

Provides equitable relief for 2018 MPP participation. The conference report allows dairy producers that were prohibited from participating in MPP following the premium reductions enacted via the Bipartisan Budget Act of 2018 (due to enrollment in an LGM contract) to retroactively enroll in coverage. 

According to Wiesemeyer, the House Agriculture Chairman Mike Conaway (R-Texas) says the farm bill conference agreement could be on the House floor for a final vote that is likely to come Thursday. Timing of the final Senate vote was less certain, Wiesemeyer says. Senator Pat Roberts (R-Kan.) said last week that Thursday could be the day, but it could slip into next week.