Randy Mooney, center, testifies before House subcommittee.
May 24, 2016

National Milk Urges Changes to Dairy Margin Protection Program

 |  By: Jim Dickrell

The Dairy Margin Protection Program (MPP) is failing to provide an effective safety net for dairy farmers, says Randy Mooney, a dairy farmer from Rogersville, Mo. and chairman of the National Milk Producers Federation. He testified today before the House Subcommittee on Livestock and Foreign Agriculture.

“For many farmers, the MPP is simply not enough to protect them in this economic environment,” he says. The reason: Congress changed the MPP formula for calculating feed costs though the insurance premium structure was not altered. During the 2012 farm bill negotiations, the feed formula coefficients were all reduced 10% to ensure the cost of the program met budget baselines. And that made a $1 or more difference in some of the milk/feed margins and whether payments were triggered.

For example, in 2015, the January-February margin was reported at $8/cwt. Had the 10% reduction in feed costs not been taken, the margin would have been $6.98, triggering payments. In fact, payments would have been triggered January through August had the feed formula not been adjusted, and three of the payment periods would have seen milk/feed margins below below $7. With the 10% adjustment, payments were triggered just twice, and at $7.50 and $7.70.

“These margins triggered MPP at only the highest coverage level of $8 per hundredweight and only 264 farmers received payments,” says Mooney. “Had Congress not reduced the feed ration calculation, …more than 8,500 dairy farmers would have received a benefit from MPP.  

“In 2015, many farmers saw that the MPP didn’t pay out much, even at the highest levels of coverage. So in 2016, they opted for the least expensive—and minimal—level of coverage available,” says Rooney.

“Had Congress not reduced the feed ration, more farmers would have seen benefits in 2015 and participated at higher levels this year,” he says.

Rooney does acknowledge that changes USDA has made in the program, clarifying the coverage new entrants to operations qualify for, has helped and will make the program more useful for farmers.

Rooney also urged Congress to come up with national legislation to define and label foods with genetically-modified ingredients before Vermont’s labeling law goes into effect July 1. Failure to do so will lead to other states passing GMO-label laws, creating a patchwork of confusing regulations.

“Failure by Congress to address this issue threatens the viability of not only my farm, but also the 30,000 farmers I represent,” he says.