June 12, 2018

Lawmaker: MPP Can’t Be Fixed

 |  By: Anna-Lisa Laca

While changes to the Margin Protection Program (MPP) have been a stop priority in both the Senate and House versions of the Farm Bill, Rep. Collin Peterson (D-Minn.) says there’s no way to fix the program.


“I don't know what you can fix this because of the way it was rolled out,” he told U.S Farm Report’s Tyne Morgan in a one-on-one interview.


According to Peterson, when the program was crafted he, with the help of the National Milk Producers Federation, put the “sweet spot” at a $6.50 margin because at that time corn was $7 per bu.


“We had a whole different world,” Peterson explained. “We were afraid that $6.50 was going to be too good.” That’s why, Peterson says, he included a stabilization fund in the bill. Turned out he was wrong and for the first two years of the program most producers didn’t even make back their premiums despite devastating milk prices.


“I had producers that signed up for $8 coverage and then they got no money out of it,” he said adding that a poor experience with the first few versions of the program soured producers on the program for good.  “So, this guy says to me, ‘I've signed up for that program and I don't care how much money you pay me. I'm never going to do it again,’” Peterson said adding he has heard that from farmers all over the country. “That's the problem with this program, people were soured on it.”


Even though there was a guaranteed $12,000 retroactive payment if you signed up at $8 coverage in 2018, Peterson says producers won’t do it. USDA estimates just over half of licensed dairy farms in the country are enrolled in the program this year.


His bigger concern, though, is people who won’t enroll and then see their neighbors get checks, then think they will enroll next year. But, next year they might get nothing.


Additionally, Peterson says he’s heard from a lot of producers who were trying to be proactive by enrolling in LGM-dairy before the most recent changes to the MPP occurred and now they are unable to participate. USDA estimates roughly 400 farmers are in that situation.


What’s the safety net solution?


Farm Bureau’s new revenue insurance program offers a solution, Peterson says.


“I think that's where we're going to land going forward,” he says. “Now, the question is going to be what does it cost.”


Farm Bureau has not released any farmer cost information for the program and it’s still unknown how well it will be accepted by producers. However, Peterson says if corn and soybeans are any indication, producers will gravitate toward a revenue protection model.


“It's popular with farmers,” he said adding that the program will have an advantage with crop insurance agents being able to explain and sell it to farmers.


“You know this whole thing is just, you know, we screwed it up,” Peterson says. “It's just a comedy of errors.”