U.S. dairy producers’ average milk-feed income margin improved somewhat in August, slowing the climb in Dairy Margin Coverage (DMC) insurance program indemnity payments. Through Oct. 2, DMC indemnity payments distributed through the USDA’s Farm Service Agency (FSA) for the first eight months of 2023 had reached nearly $1.24 billion.
The August DMC milk income over feed cost margin rose to $6.46 per hundredweight (cwt), triggering indemnity payments at all Tier I and Tier II insured levels. August DMC payments totaled about $100 million. (Read: August 2023 DMC margin rises to $6.46)
Based on latest enrollment data as of Oct. 2, 17,056 dairy operations are enrolled in the 2023 DMC program, representing about 74% of operations with established production history. January-August DMC payments averaged $72,424 per dairy operation enrolled in 2023.
Annual milk volume covered under the program totals 155.8 billion pounds, about 77% of production history established in 2023. The report does not include enrollment in the Supplemental DMC program.
Through early October, Wisconsin leads all states in total DMC indemnity payments at $264 million, averaging $61,646 per enrolled operation. That’s followed by (total payments and average payment per dairy operation): California – $136 million and $144,820, New York – $114 million and $62,732, Minnesota – $99 million and $58,264, and Pennsylvania – $96 million and $54,285.
The updated report does not include enrollment in the Supplemental DMC program. All payments are subject to a 5.7% sequestration deduction.
Historical payment totals
With four months remaining in 2023, total DMC payments have surpassed the previous annual high of $1.187 billion distributed in 2021. Indemnity payments and average payments per dairy operation in the previous four years were:
- 2022: $83.7 million, averaging $4,664 – indemnity payments were triggered in just two months (August and September).
- 2021: $1.187 billion, averaging $62,280 – indemnity payments were triggered in 11 of 12 months.
- 2020: $234 million, averaging $17,340 – indemnity payments were triggered in five months.
- 2019: $451.6 million, averaging $19,319 – indemnity payments were triggered in seven months.
Margin forecast improving
The September DMC margin and indemnity payments will be announced on Oct. 31. Based on milk and feed futures prices at the close of trading on Oct. 6, the DMC decision tool forecasts a September margin of about $8.37 per cwt. Projected margins for the remainder of 2023 are: October – $9.26, November – $9.95 and December – $9.99. If realized, 2023 indemnity payments would be triggered in 10 of 12 months.
Without approval in the 2023 Farm Bill, the DMC program expires at the end of the year.
