If we ever need a reminder of why we should participate in milk risk management programs, 2020 will forever be remembered by everyone who lived through the COVID-19 era. The sunny price outlook that seemed so certain earlier this year has turned catastrophic. We hope that dairy farmers covered their bases and engaged in some form of price risk mitigation, but we know that isn’t the case for everyone.
Indeed, these are difficult days. As milk prices swirl down the drain, some dairy farmers have issued a plea to USDA Secretary Perdue, urgently asking that the Dairy Margin Coverage Program (DMC) enrollment be reopened this year. That’s because over 10,000 dairy farmers took a pass on re-upping their participation in the farm bill’s signature dairy program.
On top of the 10,000-farm figure, another 14,000 farm owners have never enrolled in DMC coverage since the program’s inception. While some of those 14,000 turned to Dairy Revenue Protection (DRP), future contacts, or milk contracting, many instead simply took no action to secure milk price support.
While federal officials may ultimately grant the request to re-open DMC, we all should remember that price risk mitigation must be an everyday proposition. It’s an insurance policy against catastrophic events. If your house was located in a flood plain, would you forego flood insurance based on a January prediction that it would be a dry year? We find it doubtful.
As each of us sits down to evaluate our farm’s budget, we encourage you to consider again your risk management strategy and have it become an annual budget item. The University of Minnesota’s Marin Bozic recounted our thoughts succinctly in a recent webinar when he said, “We use risk management not to protect against what we know, but to protect against what we don’t.”
For the sake of those who lack price protection this year, we sincerely hope federal officials re-open the DMC program. If they do, count your blessings and sign up for the safety net this year and beyond