When President Obama signed the 2014 Agricultural Act, also known as the Farm Bill, it included a major change for the nation's dairy producers. A new program called the Dairy Producer Margin Protection Program (MPP-Dairy) was formed and the old Milk Income Loss Contract (MILC) program was set to expire.
When the USDA released the final rules on August 29, 2014, the question quickly became: How would producers get the information they need to make a decision about how to best utilize the new MPP-Dairy program?
A group of nine dairy educators from the Penn State Extension dairy team attended a training session in Syracuse, NY, at the beginning of September to become more acquainted with the program and tools available. The national Program on Dairy Markets and Policy group created online decision tools and hosted webinars for producers on the new rule. However, Pennsylvania dairy producers are a more traditional audience. Only 62% of all Pennsylvania farm operations have internet access according to the 2012 Ag Census, compared with 96% of total Pennsylvania households (US Census, 2013).
Funding was provided to Penn State by the USDA for Farm Bill education and this allowed the Extension Dairy Team to offer numerous face-to-face educational opportunities. Beginning in late September, eight members hosted 48 meetings in 29 of Pennsylvania's 67 counties with a total attendance of over 570 people. The Farm Service Agency (FSA) and Center for Dairy Excellence (CDE) provided support through press releases and mailings as well as technical assistance for producers with specific questions pertaining to the program.
From the initial release of the rule in August, a sign-up deadline was November 28, 2014, giving producers only three months to learn about the new program and make a decision. The Margin Protection Program (MPP-Dairy) differs from other government assistance programs: the MPP-Dairy removes the traditional direct payment characteristics of past programs in favor of a hybrid model of counter-cyclical payments and a traditional insurance structure. Moreover, the rules set forth in this program apply to all commercial dairy farms nationwide, which led to questions from local producers about how an international dairy market would affect their operations. It was clear producers needed more personalized assistance than what was available through media outlets. The informational sessions focused on providing producers with case farm examples and a discussion on how to best select coverage for their individual operations.
Elizabeth Kotkiewicz, County Executive Director in the Lackawanna County FSA, said, "The meeting sponsored by the Extension Dairy Team and the CDE was the most beneficial educational meeting I have attended regarding MPP-Dairy. The information provided was straight forward, easy to follow, to the point and was a 'Reader's Digest' version of what dairy producers must consider."
Of the 20 Penn State Extension district administrative units, 15 hosted at least one MPP-Dairy Information Session. In District 18, four total meetings were held, three in Leesport and one in Pottsville. Total attendance at these meetings was 47 individuals. Attendance at these meetings included industry representatives as well as producers, extension, and Farm Service Agency personnel.
Dairy producers must answer many questions besides how to best utilize the MPP-Dairy program. Risk management on dairy farms includes price risk management both for their milk income and their feed expenses (often the largest expense on a dairy farm). The MPP-Dairy could be used to mitigate this risk, or producers could use it in combination with other options such as contracting, hedging or production-related measures such as increasing milk production or feed efficiency. Some producers choose not to participate in government-sponsored programs and should be aware of all options available to them to help mitigate risk.
Response to these information sessions was overwhelmingly positive. Of the 430 respondents to a post-meeting survey, 97.4% rated the overall delivery of the program as "good" or "excellent."
Following the program:
- 99% (n=403) rated their understanding of the MPP-Dairy eligibility requirements as "moderate" or "considerable," a 55% increase from before the program.
- 96% (n=402) rated their understanding of how the MPP-Dairy margin relates to their farms as "moderate" or "considerable," a 72% increase from before the program.
- 79% (n=354) reported they were "moderately" or "very" likely to use the decision tools to determine their MPP-Dairy coverage level, a 65% increase from before the program.
- 80% (n=352) reported they were "moderately" or "very" likely to evaluate markets and adjust their MPP coverage accordingly, a 68% increase from before the program.
- 87% (n=372) rated their understanding of how the MPP-Dairy relates to other risk management tools as "moderate" or "considerable," a 72% increase from before the program.
- 80% (n=338) reported they were "moderately" or "very" likely to calculate their own farm's margin, a 58% increase from before the program.
The Extension Dairy Team also provided one-on-one assistance to producers that request further information on MPP-Dairy and other risk management tools. As part of team program efforts, Dairy Business Management educators help producers with on-farm financial training as part of the "Know Your Numbers" program started in 2010 to help producers keep accurate budgets for their dairy businesses. Now in its fifth year, the Know Your Numbers program also includes an "Advanced" project for producers who want to establish a stronger link between feed and forage management and their finances. Both the "Basic" cash flow planning and "Advanced" programs are offered through workshops in February and March or throughout the year on a case-by-case basis.
Source:psu.edu