After several delays at the Office of Management and Budget, USDA finally opened the door to begin enrollment for 2022 Dairy Margin Coverage (DMC) on Monday, December 13. The sign-up period will be extended through February 13, 2022, given the later-than-expected December notice.
Those farmers who already signed up for the multiyear DMC coverage through 2023 to take advantage of the multiyear premium discount would only have to decide to enroll in Supplemental DMC coverage. Under a new provision, eligible operations with less than 5 million pounds of established production history may enroll supplemental pounds based upon a formula using 2019 actual milk marketings.
It’s expected that the Supplemental DMC coverage will provide $580 million to better help small- and mid-sized dairy operations that have increased production over the years but were not able to enroll the additional milk production. This added benefit applies to 2021, 2022, and 2023. Participating dairy farms may receive retroactive supplemental payments for 2021 in addition to payments based on their established production history, USDA officials reported on December 8 when announcing the entire package.
Feed costs better reflect alfalfa prices
DMC made its way to the Office of Management and Budget because of the proposed changes in its feed cost formula — specifically alfalfa. That’s one of the reasons for the delayed enrollment announcement. After careful study, USDA agreed to update the DMC feed cost formula to better reflect the actual cost for high-quality alfalfa hay. As a result, USDA’s Farm Service Agency (FSA) will calculate payments using 100% premium alfalfa rather than the 50% level in the previous feed cost formula.
Over $1 billion in payments
DMC continues to make payments to farmers who enrolled in the program during 2021. Year-to-date through October, each 1 million pounds of milk covered at the highest $9.50 level has received $23,000 in indemnity payments. When totaled, over $1.1 billion in DMC payments may be distributed to dairy farmers when the 2021 program year comes to a close. Through October, payments have already totaled $1 billion.
For more information, read “USDA opens 2022 sign-up for Dairy Margin Coverage, expands program for supplemental production.”