Despite dramatic improvements in DMC compared to its predecessor, the Margin Protection Program for Dairy (MPP-Dairy), DMC enrollment lags total 2018 MPP-Dairy participation of about 21,400 dairy operations. MPP-Dairy paid about $254 million in indemnity payments in 2018; DMC payments are already estimated at nearly $230 million for the first half of 2019.
DMC provides coverage retroactive to Jan. 1, 2019, with applicable payments distributed to eligible dairy farmers shortly after they enroll. As of Aug. 25, the USDA’s Farm Service Agency (FSA) had estimated payments of $229.6 million to producers for milk production insured from January through June 2019.
The July margin and indemnity payment are announced Aug. 30. Based on projections as of Aug. 26, the margin is anticipated to be near the $9.50 per hundredweight (cwt) level.
A significant return on the investment will be achieved this year for any dairy that elects to enroll 95% of production history at the $9.50 per cwt margin coverage, according to Zach Myers, risk education manager with Pennsylvania’s Center for Dairy Excellence.
The premium for a Tier 1 dairy enrolling 95% of 4 million pounds of production history at the $9.50 per cwt margin coverage equals $5,800. Based on current actual and projected margins, this example dairy could expect to receive a net payment of $14,887. If that dairy elected to enroll for the full term of the 2018 Farm Bill and received the 25% premium discount, the net payment improves to $15,512.
The premium for a Tier 2 dairy enrolling 95% of its production history with the first 5 million pounds of production at $9.50 per cwt and the remainder at the free $4 per cwt catastrophic margin coverage equals $7,730. The net benefit to this dairy would be $18,437. This benefit improves to $20,344 with the 25% premium discount.
All indemnity payments are subject to a 6.2% sequestration fee not considered in these calculations.
“Six months of payments are already guaranteed, with the first month’s payment nearly covering the premium cost for the entire year,” Myers said. “If you do not enroll for DMC this year, you may be leaving thousands of dollars on the table that could be used to cover other expenses.”
A reminder: Sign-up for the DMC program closes Sept. 20, 2019, at local USDA FSA offices. Producers may enroll for one year (2019) or for the full five-year length (2019-23) of the program at a reduced premium rate. It’s also the deadline to request a refund of MPP-Dairy premiums. Dairies that purchased additional coverage over $4 per cwt during MPP-Dairy can choose between a 50% cash refund or a 75% refund of net MPP-Dairy premiums to be used for future DMC premiums.
DMC program participation is generally updated weekly, providing information on the number of operations enrolled, milk production history covered and indemnity payments.
Through Aug. 25, Wisconsin has seen the most participants with more than 4,948 dairy operations (Table 1), followed by Minnesota (1,933), New York (1,847), Pennsylvania (1,583) and Michigan (730). 
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Dave Natzke
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- Progressive Dairy
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