More than half of US dairy producers enroll in new Margin Protection Program

US Department of Agriculture (USDA) Secretary Tom Vilsack has announced that more than 23,000 of the nation’s dairy operations – over half of all dairy farms in America – have enrolled in the new safety-net program created by the 2014 Farm Bill, known as the Margin Protection Program. The voluntary program provides financial assistance to participating farmers when the margin – the difference between the price of milk and feed costs – falls below the coverage level selected by the farmer.

“Enrollment far exceeded our expectations in the first year,” said Vilsack. “We’re pleased that so many dairy producers are taking advantage of the expanded protection. USDA conducted a lot of outreach to get the word out. When you compare the initial enrollment rate for the Margin Protection Program to the longstanding federal crop insurance program, where participation ranges from 30 percent to 80 percent depending on the crop, it’s clear that these outreach efforts made a difference.”

During the three months of the enrollment period, USDA conducted a robust education and outreach effort to the nation’s dairy producers. The department held over 500 public meetings, sent out nearly 60,000 direct mailings, and conducted more than 400 demonstrations of the Web-based tool designed to help applicants to calculate their specific coverage needs.

Unlike earlier dairy programs, the Margin Protection Program offers dairy producers a range of choices of protection that are best suited for their operation. Starting with basic coverage for an administrative fee of $100, producers can select higher levels of coverage at affordable incremental premiums. More than half of applicants selected higher coverage beyond the basic level.

Dairy producers interested in enrolling in the Margin Protection Program for calendar year 2016 can register between July 1, 2015 and Sept. 30, 2015.

US National Farmers Union (NFU) President Roger Johnson said strong signup for the new Margin Protection Plan for dairy was “great news,” and noted the warm reception the new program was receiving from family farmers was clear evidence that they need good risk management tools in hand.

“Family-run dairy farms across the country embraced this program in large numbers, because farmers need risk management tools to handle situations beyond their control,” said Johnson. “I applaud USDA’s aggressive education campaign that demonstrated the value of this tool to producers, ultimately resulting in robust enrollment numbers.”

The Margin Protection Program, created in the 2014 Farm Bill, replaced the Milk Income Loss Contract program and gives participating dairy producers the flexibility to select coverage levels best for their operation. NFU successfully obtained a provision during Farm Bill drafting to ensure that family farmers received reduced price premiums for this new product.

“The volatility of dairy prices continues to increase year over year and is having a significant impact on the family farmer,” said Johnson. “We’re very pleased that family-run dairy farms were willing to purchase coverage even after a very profitable year,” said Johnson. “Dairy prices are cyclical and we have learned that good years often give way to bad years. Under this new framework dairy producers can be confident that they have some protection,” he added.

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