Time is Ticking to Sign Up for Dairy Margin Coverage
The clock is ticking down for dairy producers to sign up for Dairy Margin Coverage (DMC) for 2023. The signup period – which runs to Dec. 9, 2022 – enables producers to get coverage through this important safety-net program for another year as well as get additional assistance through the Supplemental DMC, according to the USDA.
DMC payments are triggered when the difference between the national all-milk price and the national average feed cost (the margin) falls below the producer-selected margin trigger, ranging from Tier 1 from $4.00 to $9.50, and Tier 2 from $4.00 to $8.00, calculated monthly.
According to the Farm Service Agency, more than 19,000 (72%) operations enrolled in DMC in 2021 and received more than $1.1 billion in payments, with an average payment of more than $62,000 paid. In 2022, nearly 18,000 (73%) dairy operations enrolled, and have received an $4,736 per operation.
Farm Service Agency (FSA) Administrator Zach Ducheneaux says that DMC provides critical assistance to both small- and mid-sized dairies in the U.S. by helping them make sure they can manage the numerous and often unpredictable uncertainties that adversely impact market prices for milk.
“This year showed why enrolling in DMC makes good business sense,” he states. “Early in the year, some economists predicted that DMC would not trigger any payments for the calendar year, but then fast forward to now, when we’re starting to see payments trigger and a return on investment.”
National Milk Producers Federation (NMPF) President and CEO, Jim Mulhern, also strongly urges dairy producers to contact their local FSA office and sign up.
“The current combination of high prices with costs that can be even higher illustrates the basic value of DMC for producers who can benefit from the program,” Mulhern says. “By calculating assistance via a margin rather than a target price, DMC offers a measure of protection against the current cost volatility that’s challenging many milk producers.”
Last year, USDA introduced Supplemental DMC, which provided $42.8 million in payments to better help small- and mid-sized dairy operations that had increased production over the years but were not able to enroll the additional production. Supplemental DMC is also available for 2023.
Supplemental DMC coverage is applicable to calendar years 2021, 2022 and 2023. Eligible dairy operations with less than 5 million pounds of established production history may enroll supplemental pounds.
For producers who enrolled in Supplemental DMC in 2022, the supplemental coverage will automatically be added to the 2023 DMC contract that previously established a supplemental production history.
Producers who did not enroll in Supplemental DMC in 2022 can do so now. Producers should complete their Supplemental DMC enrollment before enrolling in 2023 DMC. To enroll, producers will need to provide their 2019 actual milk marketing, which FSA uses to determine established production history.
The deadline to enroll for 2023 DMC coverage is Dec. 9.
By TAYLOR LEACH
November 28, 2022