Dairy Margin Coverage Payments Coming
April 20, 2020
While everyone is trying to figure out what their emergency dairy payments from the COVID-19 aid package will be, farmers who signed up for the Dairy Margin Coverage (DMC) program already have a pretty good idea what the DMC indemnity payments will be.
Marin Bozic, a dairy economist with the University of Minnesota, estimates that DMC participants could receive $17,500 in payments through the end of the year for every one million pounds of production history that they are signed up for. That equates to roughly 50 cows. Tier 1 payments are limited to the first 5 million pounds of milk production history.
According to USDA’s decision tool, the payments per cwt approximate $2.50/cwt in April, $4.50/cwt in May and June, $3/cwt in July, $2/cwt in August and $1/cwt in September, and roughly 50₵/cwt in October, November and December.
Boxic’s estimated indemnities by month per one million pounds of DMC production history then calculate out to:
October $ 881
November $ 589
December $ 443
Lucas Sjostrom, executive director of the Minnesota Milk Producers Association, reminds farmers who are signed up for the DMC to pay their $100 administrative fee if they have not yet done so. He notes that more than 200 Minnesota farmers who have multi-year DMC contracts have not yet paid their administrative fee. “Don’t miss out on these dollars,” he urges farmers.
For those producers who didn’t sign up for the year’s DMC program, they’re out of luck unless Congress acts to re-open the program. Secretary of Agriculture Sonny Perdue has said he would not do so.
“I think we really distort the whole concept of crop insurance and dairy margin coverage if we allow people to take advantage after the fact,” he said. “We don't want to incentivize people to wait and not take out insurance again and then call upon Congress and their members in order to have an ad hoc disaster program. Our safety net for dairy farmers is based on a good crop insurance program, which farmers participate in but if we train them that they don't have to participate as an insurance program, then we've defeated that purpose.”