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A First for Dairy Margin Coverage


The Dairy Margin Coverage (DMC) Program is the basic safety net USDA provides for America’s dairy farmers. It is structured to provide payments to enrolled farmers when the margin between milk income and feed costs become compressed.


A major component of how the program is structured is that the best margin coverage (which provides payments when the margin is less than $9.50 per cwt.) is available only on the first 5 million pounds of milk a dairy facility produces per year. That amount fully covers the milk from about 200 cows. Obviously, here in California where the average dairy is well over 1,500 cows, this program falls far short.


In the last Farm Bill in 2018, Congress did make a modest attempt to provide some coverage to the higher volumes of milk by retooling the premium structure for milk volumes above 5 million pounds. Margin coverage at $4 per cwt. has always been free. But in 2018, Congress provided that producers could sign up for $5 margin coverage for a premium of ½ cent per cwt. or $50 per 1 million pounds of coverage.


Geoff Vanden Heuvel

July 10, 2023

dairybusiness.com

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