ENROLLMENT IS UNDERWAY FOR THE DAIRY MARGIN COVERAGE (DMC) program. USDA’s Farm Service Agency (FSA) announced details for this year’s version of the safety net program late last month, including updates to a farm’s established production history. Sign up began February 28 and will continue through April 29 at local USDA Service Centers. Coverage will be retroactive for the entire 2024 calendar year.
FARMERS CAN SELECT VARYING LEVELS of coverage for the voluntary program, including a free option at the catastrophic $4 margin level minus a $100 administrative fee. Payments are calculated using the margin between the All-Milk price and the average feed cost.
IN 2023, DMC PAYMENTS WERE TRIGGERED in 11 months, including two months below the catastrophic $4 margin level. In all, more than $1.2 billion in payments were distributed to participating farmers.
FEED PRICES USED IN THE DMC CALCULATION descended through 2023 and remain lower at the start of this year, which will play a role in calculated margins and potential payments for 2024.
GENERAL FARM INCOME IS EXPECTED TO TREND DOWNWARD in 2024, according to Carrie Litkowski of USDA’s Economic Research Service (ERS). Overall, net cash income is forecasted at $161.1 billion, down $39.8 billion or 25.5% from 2023. During the USDA Agricultural Outlook Forum, Litkowski said multiple factors will contribute to this.
CASH RECEIPTS FROM SALES OF CROPS AND ANIMALS or animal products are expected to be 4.2% lower, and the value of direct government payments is predicted to be down 15.9%. Meanwhile, total production expenses for farms are forecast to go up 3.8%.
THE LATEST CENSUS OF AGRICULTURE REVEALED a drop in the number of farms and amount of farmland. A farm is classified as any operation that sells at least $1,000 in goods annually. In 2022, there were 1.9 million farms and ranches across the U.S., down 7% from 2017, and 880 million acres of farmland, down 2% from five years earlier.
THE NUMBER OF LICENSED DAIRY FARMS with a permit to sell milk was 26,290 last year, with an average of 357 cows per herd.
U.S. MILK PRODUCTION IN 2023 WAS SIMILAR to what it was in 2022, according to USDA data. The number of dairy cows fell slightly, down 0.2%. Turn to pages 139 to 142 for more dairy statistics.
MILK PRODUCTION ESTIMATES CONTINUE TO FALL, but StoneX Group’s Nate Donnay believes there are reasons for optimism despite the headwinds. One is that feed is less expensive than this time last year.
ALSO, IN RESPONSE TO THE TIGHT HEIFER MARKET, it appears producers are culling fewer cows. Dairy cow slaughter was down 5% to 15% from year-ago levels the last few months of 2023. In January, it fell even further and was running 15% to 20% below a year ago.
WITH NEW PROCESSING PLANTS AND EXPANSIONS planned for this year and the first half of 2025, Donnay said more milk will be needed, and some farms will take advantage despite high interest rates.
ALTHOUGH U.S. DAIRY EXPORTS WERE DOWN IN 2023, sales were valued at $8 billion, just the second time that dairy exports surpassed that level. Exports represented 17% of U.S. milk production last year.
RAGING WILDFIRES IN THE TEXAS PANHANDLE burnt 850,000 acres in late February, with early estimates by state officials predicting tens of thousands of head of cattle may also be lost as a result.
