Sign-up for the 2019 Dairy Margin Coverage (DMC) program concludes on September 20, 2019, leaving dairy producers a little more than one month to choose to participate in the new farm bill program. A reported June 2019 margin of $8.63 continues the trend of the farm bill’s signature dairy program, providing a payout for every month this year for producers that chose the maximum $9.50 coverage option. The June margin further cements that the $9.50 coverage level for Tier 1 milk results in the largest net producer payout for 2019.

Much stronger participation
There has been significant growth in the level of protection and the quantity of milk covered with passage of the DMC program, when compared to its predecessor, the Margin Protection Program for Dairy (MPP-Dairy). Even so, there is still milk eligible for DMC payments that has not made a participation decision.

It is important for producers who have not gone to their local FSA office to evaluate their participation decision for 2019. That’s because the program offers them additional payments that more than offset the Tier 1 premium cost at the highest coverage levels.

Sign-ups to date
Current weekly sign-up data as of August 5, 2019, released by FSA shows that 87.3 billion pounds of milk are now covered under the DMC program. Given the USDA-estimated $197 million in expected payments to be distributed in 2019, it shows that the enrolled production history that qualifies for Tier 1 coverage has been locked in at higher coverage level options.

The early success of the DMC program can be seen when it is compared to the old MPP-Dairy program. The 2015 MPP-Dairy sign-up data shows only 6.2 billion pounds of milk was elected to the higher $7 or greater coverage in 2015.

The 2018 MPP-Dairy sign-up had 134.9 billion pounds of milk that was enrolled in the program at the minimum coverage level. The 2019 final DMC level could easily surpass that level when the program sign-up period ends.

The nearly 10 billion pounds of additional production history enrolled for the program over the last week provides evidence that producers are continuing to enroll in the program at a rate that could make this the largest year of enrolled production history since the start of the program with passage of the 2014 Farm Bill.

Dairy producers across the country need to evaluate their participation in the 2019 DMC program before USDA closes program sign-up. Although the DMC program can’t offset the grueling economic times dairy producers have faced the past few years, it will provide many dairy producers with much needed help this year.

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(c) Hoard's Dairyman Intel 2019
August 12, 2019
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