
The margin for producing milk, as calculated by the Dairy Margin Coverage (DMC) program, reached a record high last fall as September’s margin was calculated at $15.57 per hundredweight (cwt.). Even without December’s data finalized yet, the margin exceeded $10 per cwt. for seven months last year. Boosted by All-Milk prices over $20 per cwt. every month and declining feed costs, the margin is a concrete indicator that most dairy farmers did better in 2024 than they did in 2023.
That situation was largely because of constricted milk production, which occurred due to tight replacement heifer inventories and the effects of highly pathogenic avian influenza (HPAI). For 13 months in a row, U.S. milk production was below levels from the year prior. For 16 months, the U.S. dairy herd was smaller than it was a year before.
But now those trends have shifted. Milk production was back up over year-ago levels in August, and the national herd was bigger than a year before in October. A strong margin allowed farmers to continue making milk, and greater production is now likely in the coming year. USDA has already lowered its predictions for this year’s average All-Milk price.
This means dairy farmers will likely want to consider risk management options more seriously than they may have last year. And now, USDA has announced that DMC sign-ups for the 2025 coverage year will open on January 29.
All dairy producers are eligible for DMC; a farm must only establish production history with the Farm Service Agency (FSA). Most operations establish production history based on highest milk production in 2011, 2012, and 2013, though farms that grew production in 2021, 2022, and 2023 could update their history. Dairies that did not previously establish a supplemental production history or an adjusted base production history can do so in 2025, USDA said.
A farm may cover anywhere from 5% to 95% of their production level against margins falling below $4 to $9.50 per cwt. The catastrophic $4 coverage level comes with no premium, while even the highest $9.50 level of protection has a premium of just 15 cents per cwt.
Producers can sign up for DMC at their local FSA office. After the program opens on January 29, sign-ups will be accepted until March 31.
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