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May 21, 2020

Dairy Margin Coverage Program Triggered in March

 |  By: Jim Dickrell

The United States Department of Agriculture reported this week that the Dairy Margin Coverage program will pay out 35₵/cwt indemnities for milk insured at the $9.50/cwt coverage level in March.

The milk/feed margin in March was $9.15, based on an all-milk price of $18 and a feed cost of $8.85.

“This payment comes at a critical time for many dairy producers,” says USDA Farm Service Agency Administrator Richard Fordyce. “It is the first triggered payment for 2020, and the first payment to dairy producers in seven months.”

Based on current futures markets, the payment will be even larger in April and May. The USDA calculator shows a potential payment of $3.50/cwt in April and about $1/cwt in May at the $9.50/cwt coverage level.

Futures markets have recovered enough for the summer and fall months that few payments might be triggered. But that is all contingent are markets remaining strong.