August 20, 2019

Do You Want $25,000?

 |  By: Mike Opperman

Just a few days are left for dairy producers to sign up for the Dairy Margin Coverage (DMC) program, a program many lawmakers and experts are calling a “no brainer” for dairy producers. 

It’s easy money because all producers enrolled in the program at the maximum $9.50/cwt coverage will receive payments retroactive to January 1 of this year. Payments have been triggered every month this year through July, so producers with an established production history are set to receive payments. 

“Dairy farmers prefer to get their income from the market, but much-needed payments for the first half of this year provide welcome certainty for farmers,” said Jim Mulhern, NMPF President and CEO. “DMC offers better support for dairy farmers than its predecessor, the Margin Protection Program. It’s worthwhile for every farmer.” 

To break down how much a producer can make by enrolling, Geoff Vanden Heuvel, director of regulatory and economic affairs with California’s Milk Producers Council, offers insight.

“If you sign up for the full five years of the program at the $9.50 income over feed cost margin, you get a 25% discount off the standard premium rate of $0.15 per cwt. If you do that BEFORE September 20, it will cost you $5,625 (50,000 cwts. at 11.25 cents per cwt.) for the first year and for each of the next four years of the program,” Vanden Heuvel says. “USDA will pay you the difference between the national All-Milk price and a national feed cost calculation if it is less than $9.50 per cwt.”

According to Vanden Heuvel, here is how the math works out for Tier 1 production (with 5 million lbs, or 50,000 cwts, of annual production): January’s payment will be $7,601, February $6,098, March $3,525, April $2,753, May $2,123 and June $3,575 for a total of $25,675 in payments for the first half of 2019. 

To date, of the 26,832 operations in the U.S. with an established production history, 16,176, or 60.29%, have enrolled, according to USDA. Wisconsin has the most participants at 4,832 operations, followed by Minnesota (1,865), New York (1,779), Pennsylvania (1,511) and Michigan (702). 

Producers will receive nearly $220 million in payments for the January through June period. Wisconsin leads in that category as well, with $56,146,819 in payments being sent to producers. New York, Minnesota and Pennsylvania are the next three. California ranks fifth in payments at nearly $15 million, even though just 47% of producers are enrolled.  

Signup deadline for the DMC program through your local FSA office is September 20. 

NMPF has a resource page with more information about the program, including this 4-page brochure summarizing key facts about the DMC. 

To find out how many producers in your state have enrolled, click here

For more DMC information from MILK, see below:

Dairy Margin Coverage Program FAQs

Dairy Margin Coverage Program Could Result in Lower Milk Prices

Minnesota Will Rebate Dairy Margin Coverage Premiums This Year