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May 8, 2019

March Dairy Margin Coverage Payment is 65¢/cwt

 |  By: Jim Dickrell

The March Dairy Margin Coverage (DMC) payment rate is 65¢/cwt for those dairy farmers who sign up for $9.50 milk/feed margin coverage, USDA’s Farm Service Agency (FSA) announced this week.

 

Sign-up for DMC begins June 17 at local FSA offices across the country. Dairy farmers who sign up for coverage of either $9 or $9.50/cwt will be eligible for payments in January, February and March, and based on current futures prices, well into summer as well.

 

If a dairy farm with 3 million pounds of production history signs up for the $9.50/cwt coverage level, the farm would receive a payment of $1,543.75 for March.

 

Farmers with Tier 1 production of less than 5 million pounds of milk pay a 15¢/cwt premium for $9.50/cwt coverage. The annual premium for 3 million pounds would amount $4,275 (3,000,000 X 95% X 15¢/cwt). (Note: If farmers make a one-time election to participate in all five years of DMC through 2023, they are eligible for a 25% discount for existing margin coverage rates.) All participants must also pay a $100 administrative fee, and payments are reduced by 6.2% to account for federal sequestration.

 

Nevertheless, dairy farms who sign up for $9.50/coverage would more than pay for participation in the first three months of 2019, say FSA officials. In the case of a farm with 3 million pounds of production history, the 3-month DMC payment would total $8,170 compared to the $4,275 premium.

 

USDA has a decision support tool available on-line to help dairy farmers decide whether to participate in the program and at what levels. You can access the tool here.

 

For DMC sign-up, eligibility requirements and other related information, click here for the DMC webpage.

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