Monthly feed cost data used in the Margin Protection Program- Dairy (MPP-Dairy) paints a clear picture of what is behind the more than 50 percent drop in average dairy producer margins that has taken place in the last six months.
It is those officially computed figures that determine whether producers who bought extra margin protection insurance above the program's $4 per hundredweight baseline will receive payments under the program.
As seen in the table below from the USDA Farm Service Agency website at http://www.fsa.usda.gov/programs-and-services/Dairy-MPP/index, the overwhelming driver for the more than $8 drop in margins since last October is milk price.
National average prices for corn, alfalfa hay and soybean meal have dropped significantly during that same period, but don't compare to the huge decline in milk prices from their all-time highs.
Note in particular that computed margins have dropped for six consecutive months since peaking at more than $15.61 in October. But also note that in the last three months the decline has largely stabilized in the $7.50 range.
That amount is a long way from the unprecedented $15-plus margins that dairies saw last fall, but still rates as decent compared to pretty much everything before 2014.
Of the 10,888 dairy producers who are participating in the margin protection program, just 261 bought extra coverage at the $8 per hundredweight level, and so they will receive MPP-Dairy payments from USDA. Sixty-nine of them are in Wisconsin, 35 are in Minnesota and 28 are in New York. None are in California.
The author has served large Western dairy readers for the past 38 years and manages Hoard's WEST, a publication written specifically for Western herds. He is a graduate of Cal Poly-San Luis Obispo, majored in journalism and is known as a Western dairying specialist.
It is those officially computed figures that determine whether producers who bought extra margin protection insurance above the program's $4 per hundredweight baseline will receive payments under the program.
As seen in the table below from the USDA Farm Service Agency website at http://www.fsa.usda.gov/programs-and-services/Dairy-MPP/index, the overwhelming driver for the more than $8 drop in margins since last October is milk price.
National average prices for corn, alfalfa hay and soybean meal have dropped significantly during that same period, but don't compare to the huge decline in milk prices from their all-time highs.
Note in particular that computed margins have dropped for six consecutive months since peaking at more than $15.61 in October. But also note that in the last three months the decline has largely stabilized in the $7.50 range.
That amount is a long way from the unprecedented $15-plus margins that dairies saw last fall, but still rates as decent compared to pretty much everything before 2014.
Of the 10,888 dairy producers who are participating in the margin protection program, just 261 bought extra coverage at the $8 per hundredweight level, and so they will receive MPP-Dairy payments from USDA. Sixty-nine of them are in Wisconsin, 35 are in Minnesota and 28 are in New York. None are in California.
The author has served large Western dairy readers for the past 38 years and manages Hoard's WEST, a publication written specifically for Western herds. He is a graduate of Cal Poly-San Luis Obispo, majored in journalism and is known as a Western dairying specialist.
