Dairy cows shown in line at milking station
THE MPP: “Milk it” to protect and improve your dairy margins.

How the new MPP-Dairy is a better dairy deal

MPP-Dairy changes may offer 60-cents-a-hundred incentives; sign up by June 1.

Details on the new Margin Protection Program for Dairy suggest it’ll provide notably better protections for dairy producers from shifting milk and feed prices, even for smaller farms. One projection places payments at 60 cents per cwt of milk. Enrollment begins Monday and ends June 1.

The previous Margin Protection Program didn’t work as intended due to last minute budget cuts and USDA implementation problems, notes Sen. Debbie Stabenow, D-Mich. The recent Bipartisan Budget Act provided a fix — more than $1 billion targeted to support dairy farmers.

It also made key MPP-Dairy changes “to better protect dairy farmers from losses outside their control and provide more certainty for the businesses,” Stabenow adds. It also set the stage for additional farm bill improvements.

What the new MPP offers
In brief, the program pays dairy farmers when the difference between the national all-milk price and the national average feed cost (the margin) falls below a dollar amount elected by the producer. Key changes include:

• Margin period calculations are made monthly rather than bi-monthly.

• Covered production is raised to 5 million pounds on the Tier 1 premium schedule.

• Premium rates for Tier 1 are substantially lowered.

• Limited resource, beginning, veteran and disadvantaged producers are exempted from paying an administrative fee. Dairy operators enrolled in the previous 2018 enrollment period that qualify for this exemption under the new provisions may request a refund.

“It looks like everyone with a Tier I base of under 5 million pounds should enroll or re-enroll in MPP,” says Alan Zepp, risk management program manager for the Pennsylvania Center for Dairy Excellence. “It’s certainly more appealing to farms under 400 cows, who have a larger proportion of Tier I base. Larger farms will continue using MPP.”

Zepp offered this example: Using current futures market projections, the payments could be almost 60 cents per cwt through September for those who purchase $8 coverage at a 14.2 cents per cwt premium cost.

Put another way, this is a $6,000 payment for each 1 million pounds of Tier I base. The cost would be $1,420 and it wouldn’t be due until September. “Pennsylvania yawned when the first version of MPP came out,” Zepp says. “Most farms should embrace this edition.”

Re-enroll — yes
Even if you enrolled during the previous 2018 signup period, you must make a new coverage election and submit a CCC-782 form. Your 2018 coverage elections will be retroactive to Jan. 1. You also can “opt out” by not submitting the form. All outstanding balances for 2017 and prior years must be paid in full before 2018 coverage is approved.

Dairy producers can still opt for the Livestock Gross Margin Insurance Plan for Dairy Cattle, instead of the MPP-Dairy. During the 2018 enrollment period, producers with an active LGM-Dairy policy with targeted marketings insured in 2018 months will be allowed to enroll in MPP-Dairy; but MPP coverage will start only after active target marketings conclude under LGM-Dairy.

Tap into Farm Credit East webinar

Northeast dairy producers are invited to tune in to a Farm Credit East webinar on the MPP at 1 p.m., Monday. Participation is free. If you miss it, you can still tap into the recorded session, featuring Dairy Marketing Analysts Mark Stephenson of University of Wisconsin and Andrew Novakovic from Cornell University. They’ll cover program changes plus available tools you can use to evaluate program participation.

Visit farmcrediteast.com/webinars for registration information. The recording will be accessible late on Monday or early on Tuesday via the same site.

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