milk supply

Improvements to Margin Protection Program Advance

Brian GermanDairy & Livestock

The Senate Appropriations Committee recently approved its fiscal year agricultural appropriations bill, adjusting the Margin Protection Program to make it more affordable for smaller dairy operations.  If the changes to the program are accepted by congress, it would also increase the likelihood of margin payments being issued.

milk exportsThe adjusted plan would provide participants with coverage when the national margin falls below $4 per hundredweight.  It would also change the USDA’s margin calculation to a monthly calculation, providing more stability.  Along with lower premiums, the changes would raise the threshold for free coverage for the first 5 million pounds of milk produced to $5 per hundredweight.

National Milk Producers Federation originally developed the program as a response to the disastrous losses in 2009.  Despite negative margins and low milk prices, producers have become increasingly displeased with the program’s performance over the years.  Many complaints center around the USDA’s calculation of feed costs.

Producers are hoping to see the changes approved by congress, while work to address some of the areas that can be improved further is still taking place. The National Farmers Union, as well as the National Milk Producers Federation, have come out in support of the changes, appreciating the updates to the program as a significant move in the right direction.