Roughly a quarter of U.S. milk was covered under Dairy Revenue Protection (DRP) and about 13% was insured under Dairy Margin Coverage (DMC) for 2020, said Tiffany LaMendola of Blimling and Associates on the November 4 Hoard’s Dairyman DairyLivestream.

Both programs have seen a continued growth in adoption, she added. But with each being structured via the farm bill, is there reason to worry about their availability or viability through future administrations? That was one of the many questions posed by the audience during DairyLivestream.

It’s possible, but these programs are also in a fairly favorable situation should questions come up, LaMendola and Cornell University economist Chris Wolf explained.

First, DMC is now included in Congress’s baseline spending level. That means there’s a desire to continue the program and it will be easier to do so, Wolf said. Of course, the politics of Washington, D.C., may still have some kind of influence, as well as the budget situation.

“If we get in a situation where they start looking for cuts, then there will be some politics between commodities, but it certainly helps to be part of the baseline,” he continued.

If that time comes, the relative success and uptake of both DMC and DRP should be useful in pleading their case. Commented LaMendola, “DMC and DRP have been so effective and we’re seeing increased participation, I think the numbers themselves should solidify their existence.” Continued work on improving the programs should help them remain useful.

Other options
Regardless of the future of these two programs, they are certainly not the only risk management tools available to dairy farmers. Washington State dairy farmer Bill Wavrin said he is sure to also know how to access and utilize additional risk management tools that are not at the mercy of government decisions.

“There are adequate tools in the private sector to manage risk, and it is in the interest of both people like me who sell milk and people who buy milk, commercial end users, to know the future,” he said. “We will always find a way to get together, whether it’s a government program or in the private sector.”

He specified, “This can be producer to buyer, it can be futures and options; these are all private tools, and they will remain, because that’s what markets like. They like certainty, they like price discovery.”

“I don’t expect this election will change the course of my business over the next 10 years,” Wavrin summarized.

An ongoing series of events
DairyLivestream will air twice each month for the remainder of this year. The next broadcast, “Can we sell all this milk?” will be on Wednesday, November 18 at 11 a.m. CST. Each episode is designed for panelists to answer over 30 minutes of audience questions. If you haven’t joined a DairyLivestream broadcast yet, register here. Registering once registers you for all future events.

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(c) Hoard's Dairyman Intel 2020
November 9, 2020
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