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September 5, 2018

Farm Bill’s New Dairy Program Would Triple Payments For Smaller Farms

 |  By: Jim Dickrell

Analysis of the proposed Farm Bill’s Dairy Risk Coverage (DRC) program suggests small dairy farmers (those with less than 225 cows) would see triple the benefit than they did under the Margin Protection Program (MPP), says Marin Bozic, a University of Minnesota dairy economist. Larger farms would be able to receive similar benefits on their first 5 million pounds of production.

 

“Since the start of [2018], net benefit under MPP averaged $0.83907/cwt. [at a maximum coverage level of $8/cwt.] If we already had the next Farm Bill, with the maximum coverage level at $9/cwt, and premium at $0.17/cwt, then net benefit under DRC from the start of 2018 would have been $1.79435/cwt, or about 95¢ above MPP,” says Bozic.

 

“If we had the current version of MPP since January 2015, net benefit of always electing $8 would have been $0.22/cwt. If we had DRC since January 2015, net benefit of always electing $9.00 would have been $0.71, or $0.49/cwt more than MPP,” he says.

 

These results suggest a trip to your lender is in order, says Bozic. “If increasing your monthly revenue by about 50¢/cwt on average (vs. MPP), and about a $1/cwt in a really bad year will make a difference to your lender as they make their financing decision, then my suggestion is to print this post and show it to them,” he says.

 

Differences between Margin Protection Program and Dairy Risk Coverage

 

 

 

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