The USDA’s Farm Service Agency (FSA) will begin processing Margin Protection Program for Dairy (MPP-Dairy) payments for participating dairy farmers on June 4, according to a notice sent to state and county FSA offices on May 31. Payments will be issued directly to producers via electronic deposit; there will be no paper checks, according to Wayne Maloney, in the FSA public affairs office, Washington, D.C.
MPP-Dairy payments are triggered when the margin between the national all-milk price and the national average feed cost falls below the margin trigger selected by the dairy famer during the MPP-Dairy enrollment period that closes June 1.
Read: MPP-Dairy: The deadline is now; payments already guaranteed for February through April
Coverage elections made for 2018 are retroactive to Jan. 1, 2018. USDA prices for milk and feeds required to determine the national average margin have been released for January through April, with MPP-Dairy payments triggered for February, March and April for any dairy operations that elected coverage levels of $7, $7.50 and $8 per hundredweight (cwt). Monthly margins and indemnity payment rates at the three coverage levels are listed in Table 1.
Sample herd
The payment rate calculation (Table 1) determines the amount that the margin trigger elected by the dairy operation exceeds the average actual dairy margin for a month. To determine the actual payment, further calculations must incorporate the annual production history, the percentage of milk covered (ranging from 25 to 90 percent), then divided by 12 to get the monthly milk volume eligible for payment.
For example, a dairy herd with annual production history of 7.5 million pounds and electing to cover 90 percent of that milk (6.75 million pounds) would be eligible for payment on 5,625 cwts (6.75 million pounds divided by 12) per month.
If that producer selected coverage level at the $8 per cwt level, he/she would qualify for an indemnity payment rate of $1.23163 for March. The 5,625 cwts multiplied by $1.23163 per cwt would yield a payment of $6,928 for March.
However, that payment is subject to the federal sequestration deduction. The 6.6 percent sequestration rate is subtracted ($457 in the example above), yielding a net MPP-Dairy payment for March of $6,471.
Dairy farmers who filled out an optional Form CCC-36 and created an assignment on indemnity payments to cover premium charges will see a premium deduction. Premiums will not be deducted unless Form CCC-36 was filed with the FSA office. The full balance of the premium is due Sept. 4, 2018. 
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Dave Natzke
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