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Dairy producers can receive protection from shifting prices

Photo by Anna Hastert

United States dairy producers face shifting milk and feed prices. A governmental organization helps producers overcome this challenge by offering enhanced protection.

The United States Department of Agriculture’s (USDA) Farm Service Agency (FSA) this week improved its Margin Protection Program for Dairy (MPP-Dairy). Under Secretary for Farm and Foreign Agricultural Service (FFAS) Bill Northey says the program gives dairy producers extended protection.

“This is a risk management tool that will allow folks to choose how much risk they would like to have going forward, and maybe be able to recover some of those lost margins from earlier this year as well,” Northey said.

The enhanced program offers increased coverage on the Tier 1 premium schedule. This fix helps capture protection for the first five million pounds. The changes also encompass reduced premium rates on the Tier 1 premium schedule. Northey says this adjustment will allow producers to buy up to higher levels.

Dairy producers who signed up in the previous 2018 sign-up period must make a new coverage election. Coverage elections will be retroactive to January 1, 2018. Northey encourages all producers to consider signing up for this program, aimed to assist farmers with profitability.

“It’s the difference between the average price farmers receive for milk and the cost of feed that go into that,” Northey said. “It’s a national analysis of those two levels. If it gets less than $8, or depending on what level the producer buys, then there’s a payment for that squeezing of that margin the producer has.”

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