money
May 3, 2016

Will MPP Payments Be Triggered This Month?

Top Story  |   |  By: Anna-Lisa Laca

Financial relief for farmers enrolled in the Margin Protection Program (MPP) hinges on the April margin calculations that will be released May 31.

Last week, USDA released the Agricultural Prices report for March. Corn was reported at $3.57/bu., alfalfa hay was $144/ton, soybean meal was $276.23/ton and the all milk price was $15.30/cwt. The MPP margin for March was $7.4671/cwt, according to FSA.

According to Robin Schmahl of AgDairy, those numbers could translate into an MPP payment.

“It could mean a payment, depending on the April margin,” he says. “There surely will be a payment for those with $8.00 coverage. There also is a good chance there will be a payment for those with $7.50 coverage once the average is set for March and April.”

Schmahl says the all-milk price is expected to be lower in April which would decrease income over feed cost if grain and hay prices remain near current levels.

Would you receive a payment at the $7.50 level? Let us know in the comments below.

Comments

Even if $7.50 Margin Triggers, the premium is still more than the indemnity, especially when the the indemnity is reduced because of the Payments under the program may be reduced by a certain percentage due to a sequester order required by Congress and issued pursuant to the Balanced Budget and Emergency Deficit Control Act of 1985. Should a payment reduction be necessary, FSA will reduce the payment by the required amount. (2015 was 7.3%)
For 24,000,000- lbs of covered milk the premium for $7.50 margin protection would be approximately $0.93 / cwt while a the $8 margin protection premium would be approximately $1.21 / cwt.
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