The 2014 farm law created a new, insurance-style support program for dairy farmers, based on the difference between milk prices and the cost of feed for milk cows, a so-called margin protection program. Slightly more than half — 54 percent — of U.S. dairy farmers are enrolled and most of them signed up for the most basic level of coverage, against catastrophic losses, says Iowa Public Television.
The cost of the base level of coverage is a $100 administrative fee; higher levels of protection require a larger payment. Only 22 percent of dairy farmers are purchasing higher levels of coverage this year.
The head of the National Milk Producers Federation told IPTV that few farmers saw a payment under the Margin Protection Program (MPP) last year, despite a drop in milk prices because feed prices also went down. “So what we saw this year, for 2016, was a similar level of involvement, participation in the programs, but more people were are the basic catastrophic coverage level,” said NMPF president Jim Mulhern.
IPTV says the USDA tallied $73 million in MPP fees in 2015 and paid out $685,000. An Iowa producer, Dane Lang, says he bought enhanced MPP coverage in 2015 but decided this year to forward-contract sales through the local dairy cooperative as a way to manage the risk of adverse milk prices.