Wisconsin, Minnesota and Iowa dairy producers will receive about half the Margin Protection Program for Dairy (MPP-Dairy) indemnity money paid out for the May-June period, according to a state-by-state list released by USDA.
Of the $11.17 million distributed nationwide, $5.71 million will go to producers in those three states (Table 1).
It’s no regional conspiracy, just simple math. Payments are based on the level of coverage and the pounds of milk production enrolled in MPP-Dairy in 2016.
With a calculated U.S. average margin over feed costs of $5.76 per cwt for the May-June period, MPP-Dairy paid indemnities on margins insured at $6.00 per hundredweight (cwt) or higher at the following rates:
• $6.00: 24 cents
• $6.50: 74 cents
• $7.00: $1.24
• 7.50: $1.74
• $8.00: $2.24
Read: MPP-Dairy provides payout at $6 per hundredweight coverage level and above for May-June pay period
Wisconsin farmers led the nation in selecting margin insurance coverages in the $6, $6.50, $7, $7.50 and $8 per cwt ranges at 1,465, and protected the largest volume of milk production.
Minnesota was second, with 999 producers selecting coverage in those ranges, and was second in milk volume covered.
Pennsylvania had more farmers (369) selecting coverage in the $6-$8 per cwt range, but Iowa had more milk covered at the top levels three levels ($7, $7.50 and $8 per cwt), which provided the higher indemnity payments.
Eligible farmers receive payments on one-sixth of the annual milk production history. Payments are subject to a 6.8 percent federal budget sequestration reduction.
Stronger milk futures prices have improved forecasted MPP-Dairy margins for coming months, making future payments less likely.
State ‘averages’
While Wisconsin, Minnesota and Iowa will get the highest share of total indemnity payments, farmers in Florida, Colorado, California and Texas will see the highest average payments per dairy operation.
Four Florida producers will receive an average of $23,250; followed by 18 producers in Colorado averaging $17,456; 18 producers in California averaging $16,954; and 56 producers in Texas averaging $12,217.
Gillibrand seeks refunds
In July, prior to the May-June MPP-Dairy pay period announcement, U.S. Senator Kirsten Gillibrand (D-New York) urged USDA to reimburse MPP-Dairy insurance premiums and fees to dairy producers.
She said that lower milk prices, decreased export market opportunities, an abundant domestic dairy product supply and limited processing capacity were creating a significant loss in revenue. Also, dairy farmers needed the cash to meet debt obligations.
In her letter, Gillibrand cited year-end summaries showing USDA collected $73 million in premiums and fees in 2015, while returning approximately $700,000 – about 0.1 percent – to farmers who purchased coverage.
Based on USDA’s state list, 180 New York dairy farmers will split about $404,000 in May-June pay period indemnity payments.
2017 MPP-Dairy enrollment now open
The enrollment period for the 2017 MPP-Dairy program is currently underway at USDA FSA offices. Producers have until Sept. 30 to select coverage levels and adjust milk production history.
Although not yet approved at Progressive Dairyman’s publishing deadline, congressional agriculture leaders asked the USDA to extend the 2017 MPP-Dairy enrollment period to Dec. 31, 2016. The lawmakers said the extension would allow farmers to make more informed decisions regarding income margin coverage as well as improve program participation.
Check with your local Farm Service Agency office for any deadline changes. PD
-
Dave Natzke
- Editor
- Progressive Dairyman
- Email Dave Natzke
