WOOSTER, Ohio — When farmers aren’t battling erratic weather conditions to plant or harvest their crops, they are struggling with fluctuating milk prices and feed prices influenced by supply and demand.
But the introduction of the Dairy Margin Protection Program (MPP) as part of the 2014 farm bill should help calm the storm, according to Tom Vilsack, Secretary of Agriculture and Sen. Patrick Leahy (D-Vt.).
Vilsack said the program is designed to provide financial assistance to participating farmers when the margin falls below the coverage level selected by the farmer. The margin referred to in the program is the difference between the price of milk and feed costs.
He said the enrollment period for 2014-15 runs through Nov. 28. The program will be administered through the USDA’s Farm Service Agency (FSA). While farmers are required to remain in the program through the duration of the farm bill in 2018, they have the option of selecting different coverage levels each year based on their marketing and production situation. Farmers are also required to pay a minimum $100 administrative fee each year.
The new program also carries a requirement for producers to comply with conservation compliance provisions. They are not permitted to participate in the Livestock Gross Margin dairy insurance program. Farmers already participating in this program may register for the Margin Protection Program, but the new margin program will only begin once their Livestock Gross Margin coverage has ended.
As part of the bill, the USDA launched a new Web tool to help producers determine what level of coverage under the MPP will provide them with the strongest safety net in a variety of situations. Based on feed and milk price combinations, there can be more than 100 different price scenarios for farmers.
The tool includes a spreadsheet farmers can download to keep, as well as an option to print forms to take directly to the FSA office for signup. It is a secure site and can be accessed via computer, smart phone, tablet or any other platform 24/7.
The USDA awarded $6 million in funding to universities and cooperative state extension services to prepare farmers for new farm bill programs. The National Coalition for Producer Education at the University of Illinois, along with the Food and Agricultural Policy Research Institute and the National Assoc. of Food Policy at Texas A&M University, were awarded $3 million to develop online tools and educational materials to support these programs.
Experts from the U of I, Ohio State University, the University of Wisconsin, the University of Minnesota, Michigan State University, Cornell University and Pennsylvania State University, along with experts from the National Program on Dairy Markets and Policy, in addition to online tools, will develop a number of training sessions and other educational materials to further assist dairy producers in understanding the MPP.
Producers have the option of choosing the level of milk production they want to cover, ranging from 25 percent up to 90. This is based on their production history for 2011-13. They will also choose the level of the milk price-to feed margin they wish to protect, which could range from $4 per cwt. up to $8, in 50-cent increments.
The premiums are being discounted in 2014 and 2015 for producers for up to 4 million pounds of production enrolled in the program. Premiums will be higher for those operations covering milk production above that 4 million-pound level. Premiums are free at the lowest coverage level of $4 per cwt., but rise from there.
While producers may sign up for 2014 and 2015 by the end of November, after that the program will have an annual signup. MPP is voluntary, so producers can wait until later years to enroll in the program; however, once a farmer enrolls, they must remain in the program through 2018.
"They can sign up for extended coverage from year-to-year on whether or not they want to participate in the program," Vilsack said.
He said under the program, farmers will be able to collect payments when the actual production margin for two consecutive months is less than the coverage level selected by the producer. If a farmer is involved in more than one dairy operation, each one will have to enroll separately.
Leahy said getting a new dairy program into the 2014 farm bill was a challenge, but he believes it will help small- and mid-sized farms. He added while dairy farmers are seeing higher prices now, the industry tends to revolve around boom-and-bust cycles that can swing quickly.
"I encourage every dairy farmer in the country to visit the website and see how the Margin Protection Program works," he said. The calculator tool and other details on the MPP can be found at www.fsa.usda.gov/mpptool
The farm bill also established the Dairy Product Donation Program. This allows USDA to purchase dairy products and donate them to food banks and other nonprofit groups that provide food to low-income families. Purchases only occur during periods of low dairy margins. Dairy operators do not need to enroll to benefit from the program.
For more information, visit www.usda. gov/farmbill
