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USDA Opens 2022 Sign-up for Dairy Margin Coverage

Dan Dairy, Economy, USDA-FSA

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The U.S. Department of Agriculture (USDA) has opened sign-up for the Dairy Margin Coverage (DMC) program and notes they’ve expanded the program to allow dairy producers to better protect their operations by enrolling supplemental production.

Supplemental DMC will help small and mid-sized dairy operations that have increased production over the years but were not able to enroll the additional production. Now, they will be able to retroactively receive payments for that supplemental production. Plus, USDA’s Farm Service Agency (FSA) updated how feed costs are calculated, which will make the program more reflective of actual dairy producer expenses.

Eligible dairy operations with less than 5 million pounds of established production history may enroll supplemental pounds based upon a formula using 2019 actual milk marketing’s, which will result in additional payments. Producers will be required to provide FSA with their 2019 Milk Marketing Statement.

Supplemental DMC coverage is applicable to calendar years 2021, 2022 and 2023. Participating dairy operations with supplemental production may receive retroactive supplemental payments for 2021 in addition to payments based on their established production history.

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After making any revisions to 2021 DMC contracts for Supplemental DMC, producers can sign-up for 2022 coverage. DMC provides eligible dairy producers with risk management coverage that pays producers when the difference between the price of milk and the cost of feed falls below a certain level. So far in 2021, DMC payments have triggered for January through October for more than $1.0 billion.

To determine the appropriate level of DMC coverage for a specific dairy operation, producers can use the online dairy decision tool.

USDA is also changing the DMC feed cost formula to better reflect the actual cost dairy farmers pay for high-quality alfalfa hay. FSA will calculate payments using 100% premium alfalfa hay rather than 50%. The amended feed cost formula will make DMC payments more reflective of actual dairy producer expenses.

The sign-up period runs until Feb. 18, 2022. To learn more about DMC or DIPP contact your local USDA Service Center.