Dairy farmers have until June 1st to sign up for the recently revised Margin Protection Program (MPP). There are many facets to this program for dairy farmers to consider, some of which are quite favorable. Wisconsin Agriculturist reviews a number of the finer details. Meanwhile Brownfield Ag News interviewed Fran Felber, from Ag Risk Managers, to compare the MPP with the Livestock Gross Margin-Dairy (LGM) program. There are 7 key takeaways every dairy farmer should know before making an enrollment decision.
Let’s begin with Wisconsin Agriculturist piece titled, “Enrollment for Margin Protection Program for Dairy begins April 9”. The subtitle revealed a very critical component of the program.
1. Enrollment period for MPP ends June 1
An essential point for dairy farmers to be mindful of is the enrollment deadline for the recently updated Margin Protection Program.
Congress made changes to the Margin Protection Program for Dairy in the Bipartisan Budget Act of 2018 and dairy producers may enroll from April 9, 2018, to June 1, 2018.
USDA Secrectary Sonny Perdue is quoted as saying
“We recognize the financial hardships many of our nation’s dairy producers are experiencing right now,” Agriculture Secretary Sonny Perdue said. “Folks are losing their contracts and they are getting anxious about getting their bills paid while they watch their milk check come in lower and lower each month. … We encourage dairy producers to review the provisions of the updated program, which Congress shaped with their feedback.”
2. MPP protects on the margin
The program protects dairy producers by paying them when the difference between the national all-milk price and the national average feed cost (the margin) falls below a certain dollar amount elected by the producer.
3. Farmers must make a new coverage election, even if previously signed-up.
Dairy operations must make a new coverage election for 2018, even if you enrolled during the previous 2018 signup period.
4. 2018 MPP elections are retroactive back to Jan 1 2018.
This is very noteworthy as dairy farmers can know with certainty their expected coverage payment for the first part of 2018.
Coverage elections made for 2018 will be retroactive to Jan. 1, 2018. All dairy operations desiring coverage must sign up during the enrollment period and submit an appropriate form (CCC-782) and dairy operations may still “opt out” by not submitting a form.
5. MPP or Livestock Gross Margin Insurance Plan (LGM-Dairy) but Not Both
More about this choice when we transition to the interview with Fran Felber.
Dairy producers can participate in FSA’s MPP-Dairy or the Risk Management Agency’s Livestock Gross Margin Insurance Plan for Dairy Cattle (LGM-Dairy), but not both.
6. USDA online tool available
The margin protection program decision tool isn’t the most elegant piece of software but it is very functional and a nice starting point for dairy farmers to begin their decision making process. Click the ‘Select Coverage’ button to get started.
USDA has a web tool to help producers determine the level of coverage under the MPP-Dairy that will provide them with the strongest safety net under a variety of conditions. The online resource, available at http://www.fsa.usda.gov/mpptool.
Brownfield Ag News interviewed Fran Felber seeking an answer to the question which program is best for your dairy? Noting that the Dairy Margin Protection Program has been improved, and the Livestock Gross Margin-Dairy program has been fully funded, also that only one program can be utilized for your operation (see point 5 above).
Felber further described the dichotomy between the two programs.
The margin protection program is just that protection against volatile market swings on both the input and output side of the ledger.
7. MPP – A disaster assistance tool
Meanwhile Felber implies the LGM is designed to smooth out the fluctuations in the futures market over the long-term.
8. LGM – Long-term marketing tool
Felber notes that the MPP is priced quite attractively for operations with less than 5 million pounds. These operations will fall into the tier 1 pricing schedule. Moreover, those who select MPP will know what they get for benefits because it is retroactive back to Jan 1. This is another reason to strongly consider the MPP option.
9. MPP – Priced attractively for operations with less than 5 million pounds
Dairy farmers should review these 9 key points before making their margin protection program election. Both the MPP and LGM programs should offer more certainty to dairy farmers who have experienced very volatile market conditions recently. Be certain to file your paperwork before the June 1st deadline. Both
Image Courtesy Wisconsin Agriculturist