April Class III Third Highest on Record; DMC enrollment Posts a Decline
May 6, 2022
USDA announced April’s Class III price to be $24.42/cwt., the third-highest on record behind September 2014, which delivered $24.60 and July 2020 at $24.54. April’s 2022 price increase was a whopping $1.97/cwt more than the previous month.
With 2022 delivering high milk prices and the forecast showing more of the same, it is of no surprise that enrollment in the USDA’s 2022 Dairy Margin Coverage (DMC) program showed a negative decline.
USDA released the 2022 DMC program enrollment, showing more than 17,500 dairy farms had enrolled in the 2022 DMC program. This represents 71.5% of those farms with established milk production history. The report showed a loss of 1,500 farms compared to 2021 DMC enrollment. Although this is probably not as much as anticipated because of strong milk prices.
With smaller producers eligible to boost annual milk production history retroactively to 2021 through 2023 under the Supplemental DMC, total milk production recorded with the USDA’s Farm Service Agency (FSA) for 2022 is more than 205 billion lb., down 14 billion lb. from 2021.
USDA’s National Ag Statistics Service (NASS) illustrates a decline in the number of licensed dairy herds. In 2021, there were an estimated 29,858 herds licensed to sell milk and in 2020 there were 31,652 farms. With a record of more than $1.19 billion DMC payments distributed to dairy producers under the 2021 program, National Milk Producers Federation (NMPF) urged every dairy farmer to sign up for maximum DMC coverage.
“DMC offers cost-effective margin protection for small and medium-sized producers and inexpensive catastrophic coverage for larger dairies. It provides critical protection against unforeseen market disruptions – and if the past two years have shown anything, it’s that unforeseen market disruptions can happen,” Jim Mulhern, NMPF President and CEO states.
The DMC Decision Tool forecasts 2022 monthly DMC margins are estimated to average $11.66/cwt. for January – June 2022. The forecast continues to show averages well above the $9.50/cwt., the threshold for maximum Tier I coverage.