Once the Margin Protection Plan - the milk insurance coverage passed in the latest farm bill - and its associated rules are formally announced later this summer, some dairy farmers will have to make some very calculated decisions.
For some, it will be whether or not to participate in the Margin Protection Plan (MPP-Dairy). For another group of dairy producers, they will have to decide between the newly minted MPP-Dairy and Livestock Gross Margin Insurance (LGM-Dairy). Why? USDA will not allow them to participate in both programs which are supported by federal tax dollars.
The LGM-Dairy product has been available for a number of years. For those who want to continue using it, the choice is simple - go ahead and do so.
For those producers with signed LGM-Dairy contracts, who want to convert to MPP-Dairy, there needs to be a clean break. The LGM-Dairy contracts will remain in place through the signed marketing period. After all of a farm's LGM-Dairy contracts expire, the producer may switch to MPP-Dairy.
It's important to note when this takes place, there could be a one-month period where a farm has no coverage for LGM-Dairy or MPP-Dairy. Why? MPP-Dairy has fixed, two-month periods which determine when an indemnity (insurance coverage) payment could be made. That said, LGM-Dairy contracts could expire in between those two months.
For more details, download the file here.
