Just as the introduction of genomics - the DNA-based study of genetics - caused many dairy producers not previously interested in genetics to take notice, the government's Margin Protection Program (MPP-Dairy) has caused dairy farmers to take greater notice of risk protection. "The Margin Protection Program (MPP) caused more dairy farmers to talk about price risk management than ever before," Ed Gallagher of DFA's Risk Management division told those attending INTL FCStone's 12th Annual Dairy Outlook Conference at the Federal Reserve Bank in downtown Chicago, Ill. And Gallagher should know, as he has specialized in dairy economics for nearly three decades.
"By December 31, 2014, we had booked more forward contracts for milk delivery for the following year than we ever had," said Gallagher, who works for the nation's largest dairy cooperative. Most of that volume occurred during the MPP sign up period. "Those numbers are even more impressive when you factor in that the milk prices members were contracting were significantly lower than the prices they were receiving in their milk checks during the last part of 2014," he went on to explain.
