The Bipartisan Budget Act of 2018 passed by Congress in February contains some crucial changes and improvements to the USDA’s Margin Protection Program (MPP) that dairy farmers rely on in challenging markets. For Land O’Lakes, Inc. member-owners, now is your opportunity to reconsider your participation in this program.
The U.S. Department of Agriculture’s (USDA) Farm Service Agency (FSA) has set a new enrollment period to purchase new or additional coverage to run from April 9 to June 1, 2018. Additionally, any coverage purchased during this new enrollment window will be retroactive to January 1, 2018.
The Margin Protection Program offers farmers several levels of protection from falling margins, starting with a catastrophic level, which is free (no premiums) to farmers who enroll and pay a $100 annual administration fee. MPP offers farmers a financial safety net when the margin – the difference between the price of milk and the cost of feed – falls below the dollar level the farmer selects for protection. For instance, if a farmer has $7 coverage, and the margin sinks to $6.50, the farmer receives 50 cents per hundredweight.
The improvements to the program included in the Bipartisan Budget Act of 2018 might make MPP a more attractive investment for our members, and currently enrolled farmers might want to consider higher levels of protection.
The important changes to the MPP program include:
The catastrophic level of margin protection has been raised from $4 to $5.
The amount of milk covered in the first tier and second tier has been raised to five million pounds, up from four million. This covers operations of roughly 220 cows.
The premium cost for first tier buy-up coverage has been significantly reduced – between 40 and 70 percent.
The margin calculation will be determined every month, instead every other month, as it previously was. This will make it more closely resemble the market conditions farmers are facing.
The $100 annual administrative will be waived for “underserved” farmers, including women, beginning farmers, veterans and minorities.
Members can enroll at Farm Service Agency offices. Producers must be able to document their production history and provide information about their current production.
Given the exceptionally tight margins predicted for dairy producers this year, Land O’Lakes encourages members to reexamine if the program makes sense for their operation
. If you have any immediate questions, or need help evaluating whether to participate, please contact Bonnie Van Dyk at (651) 252-8420 or BVanDyk@landolakes.com