May 8, 2017

MPP Participation Will Grow, With Changes

 |  By: Mike Opperman

Dairy farmers in Michigan and across the nation need federal lawmakers to revise the safety net created in the 2014 Farm Bill to provide them adequate risk management protection, according to a dairy farmer from eastern Michigan who testified at a Senate hearing in Frankenmuth, Mich.

Darrin Siemen of Harbor Beach, Mich., told a Senate Agriculture Committee field hearing that the Margin Protection Program (MPP), created in the 2014 Farm Bill, “has failed to deliver the protection farmers need and expect. While MPP remains the right model for the future of our industry, changes are needed if Congress wants to prevent dairy farmers like me from going out of business,” he said.

Siemen is a fourth‐generation family farmer and owner of Prime Land Farm. He testified on behalf of his cooperative, Michigan Milk Producers Association (MMPA), as well as the National Milk Producers Federation (NMPF), of which MMPA is a member. His full testimony can be found here.

Siemen said that the MPP is designed to help farmers insure against either low milk prices or high feed costs, but the way the program calculates the relative value of feeds such as corn, soybean meal and hay was “significantly changed” as it was written into law. This change “fundamentally altered the safety net designed by NMPF and other dairy leaders around the country. Unfortunately, as a direct result of these changes, the MPP safety net has failed to deliver the protection farmers need and expect,” he said.

“I am not asking for a program that guarantees a profit, nor do I want a program that will incentivize excess production,” Siemen said. “However, when Congress made changes to the program, rendering it ineffective, dairy farmers like me lost faith in the idea that MPP could serve as a viable risk management tool under its current formulation. If Congress makes changes to ensure that MPP more accurately reflects the actual costs of production for businesses like mine, participation in the program will increase.”

Siemen said that in addition to adjusting the feed cost formula and the data sources for the prices of feed and milk, Congress should reassess the MPP’s premium rate structure, and consider expanding access to the Livestock Gross Margin program, a separate risk management tool offered by USDA.

Siemen pointed out that dairy farmers are also facing other policy challenges, including immigration and labor shortages, tax reform, child nutrition and environmental sustainability.