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Perdue Says USDA Will Not Reopen the Dairy Margin Coverage Program

April 16, 2020

Anna-Lisa Laca

While milk markets have been in a tailspin, a lot of dairy producers and industry groups have called on USDA to reopen the Dairy Margin Coverage (DMC) program. Secretary Sonny Perdue, on Thursday, told AgDay TV host Clinton Griffiths he would not reopen the program.

“We get a lot of requests about reopening the dairy margin coverage program,” Perdue said. “It is essentially an insurance program and the principle of insurance is you have to have it before you need it.” 

Sign-up for 2020 was down 19% from 2019. Enrollment in 2019 was made by 23,255 dairy operations, or about 82% of those eligible. They covered about 180 billion pounds of milk. For 2020, the DMC enrollment was just 63% of those operations enrolled last year, and they covered just 114 billion pounds of milk.

“I think we really distorted 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.”  Perdue noted USDA is looking for other ways to indemnify dairymen, including direct payments.

“This first draft [of the program] is probably going to be in the $16 to $18 billion dollars, $16 billion in direct payments to our producers really in all of our sectors, including cattle, livestock, the cash cow count, calf operations, hogs, as well as produce, specialty crops, and commodities. And then the dairy sector, certainly all of those and other extraneous things like horticulture, any kind of ag producer will be available for direct payments,” he explained. “Then we're also going to have about a $2 to $3 billion dollar purchasing program trying to take this dislocated food out of our supply chain that had been going into food service institutions and move it back into our food banks and other non-profits to rake in again to help provide the needed food for people who are staying at home.” While he couldn’t share many details, Perdue said information on the aid package would be released soon.

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