Federal dairy price protection program deadline looms

MONTPELIER — Vermont Agriculture Secretary Chuck Ross is encouraging all Vermont dairy farmers to enroll in the Margin Protection Dairy Insurance Program, or MPP. Last week the USDA extended the application deadline to Dec. 19 (the deadline had been Dec. 5).
“Dairy farming in Vermont has many risks. The Margin Protection Program is a means to manage the risk of dropping milk prices and rising feed costs,” Ross said in a press release.
The USDA Margin Protection Dairy Insurance Program provides dairy farmers a risk management tool similar to crop insurance that can insure the margin between milk prices and feed costs. The funds available after covering feed costs are used by farmers to pay veterinarians, farm labor, energy bills and other farm expenses.
“Milk prices have been strong throughout 2014 but predictions for 2015 show a potential decline of over $8. This insurance program can help farmers prepare for these changes,” Ross said.
The USDA Margin Protection Program helps dairy producers lock in a set margin of minimum profit to guard against low milk prices and high feed costs. While milk prices this year have approached $25 per hundredweight, projections indicate that milk may drop to $19 or even $16 per hundredweight during 2015. Feed prices appear stable at this time but events like the drought in 2012 can radically affect feed prices in Vermont.
U.S. Secretary of Agriculture Tom Vilsack said farmers who sign up this year will get a bonus over those who wait until future years to sign up.
“Those who apply this year will receive a slight increase in production protection that will not be available in the future,” Vilsack said in a press release. “Farmers who do not sign up for the Margin Protection Program for 2015 will forfeit the 1 percent base production increase. For a 400 cow operation, this would equate to an additional 80,000 pounds of milk that are eligible for coverage. It’s a small step to take to ensure your business is covered.”
Vilsack encouraged dairy farmers to use the online resource at www.fsa.usda.gov/mpptool to calculate the best levels of coverage for their dairy operation. They can type in specific operation data and explore price projections and market scenarios to determine what level of coverage is best for them. They can also compare the data to see how the program would have helped in previous years, such as 2008, when margins dropped by as much as $8 in three months.
The Margin Protection Program replaced the Milk Income Loss Contract program, known as MILC, which ended in 2014 with the enactment of the new Farm Bill. This makes MPP the main safety net for dairy farmers.
Ross encouraged producers to sign up at their local USDA Farm Services Agency office as soon as possible, in order to have their production history recorded and complete required paperwork by the Dec. 19 deadline. The cost is the $100 administration fee for the basic coverage and farmers can elect to increase their coverage. Farmers can also contact UVM Extension to discuss options to buy up the insurance coverage to fit their individual farm situation.
“This is the best safety net program available to Vermont’s dairy farmers,” Ross said. “Take action this week to reduce your risk.”
For more information contact Diane Bothfeld of the Agency of Agriculture at [email protected] or contact the UVM Extension Office at 1-866-622-2990 or visit: www.uvm.edu/extension/agriculture/livestock/?Page=dairy.html.
Farmers also have a chance to share comments and help shape the Margin Protection Program for the future. The USDA is taking public comments on both the Margin Protection Program and the Dairy Product Donation Program until Dec. 15. Comments can be submitted via the regulations.gov website at http://go.usa.gov/GJSA or by U.S. mail to: Danielle Cooke, Special Programs Manager, Price Support Division, FSA, USDA, STOP 0512, 1400 Independence Ave. SW, Washington, D.C., 20250-0512.

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