New Ways to Mitigate Risk for Dairy Farmers

USDA Launches new Dairy Risk Management Program

By Denise Faguy, Farms.com

After the Labor day long weekend, 46,000 US dairy farmers will be able to sign up for the new “Dairy Margin Protection Program”.  The program, developed by the US Department of Agriculture (USDA), is designed to help dairy farmers manage the risk that their cost of production (based on their feed and other costs) will be higher than what they actually receive as payment for their milk.  The Margin Protection Program will replace the USDA’s Milk Income Loss Contract program.

How does the Dairy Risk Management Program work?  The voluntary program enables dairy farmers to choose the level of protection they feel most comfortable with.  The USDA has developed an online calculator which assists dairy farmers to figure out the best level of coverage for their specific needs.  The web tool asks the farmers to input unique operational data and key performance indicators, and then recommends a coverage level based on projections for the price of milk.

"We've made tremendous progress in implementing new risk management programs since the Farm Bill was signed over six months ago," said Vilsack. "This new program is another example of this Administration's commitment to provide effective safety net programs that allow farmers and ranchers to manage economic risks beyond their control. And the supplemental Web tool will empower the nation's 46,000 dairy producers to make decisions that make sense for them."

To enroll for 2014 and 2015, dairy farmers must submit their information between September 2 to November 28th, 2014.  Restrictions apply for dairy farmers that are participating in other USDA dairy programs.  Dairy producers should research the restrictions on the USDA website prior to enrolling in the program. 
The USDA is looking for feedback from dairy farmers through its Farm Service Agency.  The agency is investigating whether its programs are meeting the needs of an industry that is evolving the management of dairy operations.