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June 27, 2019

Farmers to Receive Retroactive Dairy Margin Coverage Payments in July

 |  By: Anna-Lisa Laca

Dairy producers enrolled in the Dairy Margin Coverage program (DMC) can expect to start receiving retroactive payments the first or second week of July. According to Bill Northey, USDA Under Secretary for Farm Production and Conservation, the office of management and budget is finalizing some details, but USDA is ready to issue payments as soon as they get the green light. 

“We plan to start payments pretty soon. We have our software and our mechanics nearly ready to go at least by the first of July here,” Northey told a group of reporters on Thursday. 

Because the program is retroactive, payment is guaranteed upon enrollment. According to Northey the retroactive payments alone cover premium costs at this point. In fact, many analysts are saying participation in the program is “a no-brainer.”

Sign-ups for the new safety program, which was authorized in the 2018 farm bill, began on June 17. In the first 10 days enrollment was open, more than 5,300 producers signed up to participate. In 2018, 21,000 producers participated in the Margin Protection Program (MPP). Northey expects enrollment to outpace MPP by the time the sign-up period ends on Sept. 20. 

“We think and we hope that we'll see a sign up that may even exceed last year's participation levels,” he said. “Last year, we saw a lot of folks waiting towards the end of the signup period to sign up as well.”

Several changes to the program that allow the calculations to more accurately reflect what’s happening in farm country are incentivizing dairy farms of all sizes to enroll in the program.

“This [program] decreased the premium and added to the amount of margin that was available,” Northey explained. “The previous program had an $8 margin availability, this one has a $9.50 cent availability. There’s a little more flexibility as well for bigger producers. They had a disincentive to participate in the last round, but all producers have a good incentive to participate in this round.”

The majority of the producers currently enrolled in the program elected $9.50 coverage on their Tier 1 production (first 5 million pounds of milk), according to Northey. Those producers who enrolled additional production have done so at the $4 and $5 levels. 

Producers have the option to either enroll for one year or enroll for a five-year period and save 25% on their premiums. 

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