It was only a year ago when I sat down with representatives of the dairy industry and heard of their optimism for 2020. After years of hard times for the industry and uncertainty, they looked happy because things were finally starting to turn around in the marketplace. Trade wars are being settled with China and Japan, and prices were starting to come up. Even though there was still uncertainty, there was also increased confidence in the new safety net called the Dairy Margin Coverage program. This gave the industry and producers a sense of balance even though they felt it was a program that they did not think they were going to need in 2020. However, COVID-19 reared its ugly head, and things did not pan out exactly the way we hoped they would.
The 2020 growing season was nothing more than a stark reminder that things do not always go as planned. That is why we have those safety net programs, that are optional for producers to use, from the United States Department of Agriculture. Bill Northey is a former Iowa Agriculture Secretary and current USDA Undersecretary for Farm Production and Conservation. Northey talks about the history of the Dairy Margin Coverage program and its origins in the previous Farm Bill.
Undersecretary Northey admits that as we made our way into 2020, there did not seem to be much of a need for programs like Dairy Margin Coverage. Many farmers took the option of not signing up for the program. However, a few producers looked at the situation and thought that the outlook maybe was just a little too good to be true. They decided that it was better to pay just a little bit to have a sense of security, then it was to risk anything bad happening. After the pandemic started and the markets fell, the people that erred on the side of prudence looked to be better suited to weather the storm.
The signup period for Dairy Margin Coverage protection ends on December 11th. Undersecretary Northey says he expects to see more producers take advantage of the program than did last year. It is a good reminder that no matter how rosy the outlook is, it pays to have a safety plan in place.
To learn more about the Dairy Margin Coverage program or to sign up, visit your local Farm Service Agency office or visit the USDA Farm Service Agency website.
