Dairy farmers only have a few more days to go to their county Farm Service Agency office to sign up for USDA's Margin Protection Program (MPP) for 2016, the National Milk Producers Federation said today.Jim Mulhern, President and CEO of NMPF, reminded farmers Tuesday that they have through Friday, Nov. 20, to obtain or adjust their coverage under the MPP, which provides dairy producers protection from a sharp downturn in milk prices, a steep rise in feed costs, or a combination of the two.
Nearly 25,000 dairy operations about 55 percent of the total number of farms in the country obtained coverage through USDA in the calendar year 2015, the first year of the MPP. Those farms' combined production history represents approximately 170 billion pounds of milk, or 80 percent of the U.S. milk supply. Of the farms currently enrolled in the MPP for 2015, more than half chose to purchase MPP coverage above the basic, $4 margin level.
Mulhern noted that, like any insurance product, the MPP was not designed to make payouts every year. So far in 2015, the MPP has issued payments in each of the four, two-month coverage periods for those who elected to insure their margins at the maximum $8 margin level, but the payments did not cover program premiums. Producers who purchased coverage at lower levels have not received any payments.
"NMPF worked with dairy farmers across the country, and with Congress and the USDA, to design a safety net program to protect against catastrophic declines in the national average dairy farm margin," Mulhern said. "Margins this year have been disappointing, but not the disasters we saw in 2009 and 2012, and the MPP's payouts reflect that." He noted that the previous dairy safety net, the Milk Income Loss Contract program, would not have triggered any payments in 2015.
Those 25,000 farms that enrolled in 2015 will need either to pay a $100 administrative fee for basic coverage at the $4 margin level in 2016, or pay additional premiums on a sliding scale for a greater degree of MPP coverage.
"Dairy futures currently indicate that margins in the first part of 2016 will be better than this year, but so much depends on things we can't precisely predict, from the weather, to the growth of the global economy, to demand for both dairy products and livestock feed," said Mulhern. "That's why it's important farmers look at their individual margin needs to make a decision on their program coverage level for 2016."
NMPF has a variety of tools on its Future for Dairy website (http://www.futurefordairy.com) to help farmers make their sign-up decisions. Included is a downloadable calculator that allows producers to plug in their own numbers and quickly see the program's protection impact on their farm.
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11.17.2015