Peterson: DMC Should Be Modified To Protect Large Dairies, Too
The Dairy Margin Coverage program (DMC), that went into effect this year in place of the former Margin Protection Program, has paid farmers more than $300,000,000 in 2019. While the dairy industry as a whole is happy with the program, House Ag Committee Chairman Collin Peterson (D-Minn.) says some changes need to be made to make the program more beneficial to farms of all sizes.
“I think we have finally put together a program that is working pretty well,” he told Pro Farmer’s Jim Wiesmeyer on Thursday. “If you have 220 cows or less, you have a safety net set that's affordable and will keep you from losing money.”
Peterson is referring to the fact only the first five million pounds of milk production are included in what’s called Tier 1 coverage under the program. Five million pounds of milk production annually roughly equates to a 220-cow dairy. While larger farms are welcome to participate in the program, coverage outside of that first five million pounds is much more expensive than the milk included in Tier 1.
“The catastrophic coverage is affordable for the big guys, so we have some of them taking advantage of that,” he says. But USDA data shows larger herds are not “buying up” coverage beyond the catastrophic level at the same rate smaller herds are.
According to Peterson, 2018 was the worst year “we’ve ever had” in the dairy industry. “It was a tremendous hardship on people,” he said. “The MPP did not work.”
He said with confidence the new program works.
“I don't really at this point have anybody complaining to me,” he said, adding that some people who got really behind expect the program to guarantee enough profit to get out of the hole. “There’s no way we can pass a bill that's going to do that.”
Still, Peterson said some tweaks to the program might help it protect large-herds as well as it does small ones.
“I think we've got a pretty good policy right now and maybe we should tweak it,” he said. “Maybe the five million pounds should be increased. That’s the next place that I would go to look at would be to increase the amount of coverage that we would do at that at that $9.50 level like we've done for the smaller producers.”
If the futures and milk price projections for the next few years are realized, Peterson says it’s going to be good times for dairy and people are going to be making money. “That will help, you know, stabilize some of these operations,” he said.