With USDA initiating sign-ups for its cornerstone dairy safety net program on June 17, the federal agency simultaneously updated a major component in the feed cost margin calculator — hay prices. After listening to industry concerns, the department built in a 50 percent blend that includes Premium and Supreme alfalfa hay prices. This adjustment more closely aligns with real-world dairy rations and farm gate feed prices.

With this top-quality alfalfa hay blended into the formula, USDA also announced revised feed cost margins for the first four months of the year.

To better appreciate the adjustments, here are the updated “Income over feed cost margins”:

January 2019 — $7.71 revised “Income over feed cost”

January 2019 — $7.99 old “Income over feed cost”

January 2019 — 28-cent movement in “Income over feed cost”

Updated January 2019 bottom line — $1.79 per cwt. payment at $9.50 coverage (had been $1.51)

February 2019 — $7.91 revised “Income over feed cost”

February 2019 — $8.22 old “Income over feed cost”

February 2019 — 31-cent movement in “Income over feed cost”

Updated February 2019 bottom line — $1.59 per cwt. payment at $9.50 coverage (had been $1.28)

March 2019 — $8.66 revised “Income over feed cost”

March 2019 — $8.86 old “Income over feed cost”

March 2019 — 20-cent movement in “Income over feed cost”

Updated March 2019 bottom line — 84 cents per cwt. payment at $9.50 coverage (had been 64 cents)

April 2019 — $8.82 revised “Income over feed cost”

April 2019 — $8.96 old “Income over feed cost”

April 2019 — 14-cent movement in “Income over feed cost”

Updated April 2019 bottom line — 68 cents per cwt. payment at $9.50 coverage (had been 54 cents)

To make your own calculations
To assist producers in making coverage decisions, USDA partnered with the University of Wisconsin to develop a decision tool for the Dairy Margin Coverage Program. The tool will help dairy producers evaluate different scenarios.

As for making a selection, we encourage dairy farmers to read insight from the University of Missouri’s Scott Brown earlier this year in the item An important decision just got easier to make.

Additional resources can be found on the Hoard’s Dairyman website on the Dairy Margin Coverage webpage.

Also, it would be beneficial to read the sign-up instructions from the Farm Service Agency (FSA).

To comment, email your remarks to intel@hoards.com.
(c) Hoard's Dairyman Intel 2019
June 17, 2019
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