It’s another $1 billion year for DMC

Though the calendar has not yet turned to fall, the Dairy Margin Coverage (DMC) program has already eclipsed the $1 billion mark in payments for 2023. Expected payments as of September 5 are now at $1.13 billion, nearing the previous DMC record payout of $1.19 billion in 2021. Though year-to-date payment levels are similar to the 2021 total on a national scale, the state-by-state distribution of these payments has changed.

Total U.S. payments from the first seven months of 2023 are only 5% below the 2021 total, but payments to Missouri producers are 24% less. Other states in the top 20 for year-to-date DMC payments that are well below 2021 levels include Oregon (-14%), Virginia (-13%), Illinois (-12%), Minnesota (-11%), and Vermont (-11%). Meanwhile, Idaho producers have already accumulated 21% more payments than in all of 2021, followed by Texas (+19%), South Dakota (+15%), and California (+10%).

Though there are many reasons why the distribution of payments would change from year to year, the fact that June and July DMC margins were below $4 — the coverage level that requires no premium payments regardless of production history quantity — appears to be the biggest factor driving the changes. The lowest monthly DMC margin in 2021 was $5.03.

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