USDA announced several changes in the Margin Protection Program for Dairy (MPP-Dairy), including decoupling the percentage of milk production eligible for catastrophic coverage, and allowing production history adjustments when a family member joins a dairy operation.
USDA made the changes based on recommendations from the National Milk Producers Federation (NMPF).
“The Margin Protection Program must continue to evolve based on the experiences of NMPF’s members and others in the dairy industry,” said Jim Mulhern, NMPF president and CEO. “USDA is constrained in what it can do to strengthen MPP-Dairy, but we very much appreciate these steps to implement administrative changes that will improve the program’s usefulness to dairy farmers.”
Mulhern said the program remains a work in progress, given the challenging farm milk price situation facing dairy farmers in 2015 and this year.
Coverage options decoupled
One change will ensure that all farms enrolled in MPP-Dairy will receive catastrophic coverage at the basic $4 per hundredweight margin level on 90% of their production history. Participants will have the ability to purchase buy-up coverage at less than 90 percent of their history.
For $100 per year, dairy producers receive basic $4 protection covering 90% of their milk production. At higher premium levels, farmers can protect from 25 percent to 90 percent of production history with margin coverage levels from $4.50 to $8, in 50-cent increments.
“Decoupling coverage options under MPP improves the ability of the program to offer effective risk management options to dairy farmers,” said Mulhern.
Mulhern anticipates decoupling the coverage options will increase dairy farmer use of the program by not reducing benefits to farmers who elect to purchase supplemental coverage, and by providing more flexibility in coverage design.
This change is effective for the current 2016 coverage year. While a majority of farmers using the program in 2016 are protected at the $4 level, for those who bought up a higher level of margin, but did not cover 90 percent of their milk production, this change ensures that they are still receiving catastrophic protection on the maximum level of production allowed by the MPP.
Adding family members, production
USDA also announced a rule change to allow a farm’s production history to be restructured in order to accommodate new family members joining a particular dairy operation. This will accommodate the intergenerational transfer of production history for children, grandchildren, and their spouses to join a dairy operation.
Any dairy operation already enrolled in MPP that had an intergenerational transfer occur will have an opportunity during the 2017 annual coverage election period to increase the operation’s production history up to 4 million pounds per year.
The next enrollment period begins on July 1, 2016, and ends on Sept. 30, 2016. Each participating dairy operation is authorized one intergenerational transfer at any time of its choosing until 2018.
“This measure will help younger farmers, as they become part of a multi-generation dairy operation, to more fully use MPP. That will help families keep their farms into the future,” Mulhern said.
The rule also codifies a policy change made earlier this year giving dairy farmers the opportunity to pay their premium through additional options, such as a periodic milk check deduction handled by their cooperative.
Read USDA expands safety net for dairy operations adding next-generation family members. PD
—From National Milk Producers Federation news release
