Two dairy groups are calling for changes to the Margin Protection Program for Dairy (MPP-Dairy). While one is merely an extension to the sign-up period for 2016, the other concern delves much deeper into the MPP-Dairy feed pricing formula.
In a Tuesday, September 15 press release, the National Milk Producers Federation's Jim Mulhern asked USDA for a 60-day extension so that dairy farmers can more easily sign up for 2016 coverage. The concern is, with the fall harvest in full swing, MPP-Dairy coverage may go by the wayside of the "to-do list" as dairy producers put in long hours to bring in the crop.
In that same press release that coincided with a letter to USDA Secretary Tom Vilsack, Mulhern also commended flexibility in paying 2016 premiums. Read the full release here.
A more concerning issue appears to be taking place out East as feed prices used by USDA in MPP-Dairy equations are not matching actual producer costs.
"Farm Credit East did an analysis with the real cost information and it shows that Northeast farms paid at least 20 percent higher for their feed than MPP indicated," wrote Agri-Mark's Robert Wellington in a letter to USDA Secretary Vilsack.
"Their (Farm Credit East) calculation for June showed a feed price distortion of $1.61 per cwt.," continued the Agri-Mark senior economist. "FSA reported an $8.16 margin in June that would result in no payments to any farmers. However, the corrected number, according to Farm Credit East, would have been a margin of $6.57. This would have paid significant dollars to anyone who bought coverage at or above $7."
While Wellington proposes three potential fixes to the MPP-Dairy situation in the attached letter, any potential change starts with USDA Secretary Vilsack and the federal agency he heads up.
(c) Hoard's Dairyman Intel 2015
September 21, 2015
