By John Newton, Department of Agricultural and Consumer Economics, University of Illinois
The new “dashboard” emphasizes the strategic thinking that dairy farmers need to consider during each calendar year sign-up decision.
The 2014 Farm Bill provides the most comprehensive reform to the U.S. federal dairy farm safety net seen in decades. In place of milk price and revenue support programs, the new farm bill creates a Margin Protection Program for Dairy Producers (MPP-Dairy). MPP-Dairy is specifically designed to be simple to use and appealing to all dairy producers, regardless of management style or business model.
First, it provides dairy producers the opportunity to annually self-select coverage levels to protect against declines in national, rather than farm-level, income-over-feed-cost margins. Second, the premium rates are fixed at predetermined levels explicitly written into the farm bill. Finally, farms of all sizes can purchase margin protection near their historical maximum levels of milk production. For a detailed discussion of the specific dairy title provisions of the new 2014 farm bill, see here.
In today’s post, I will introduce an interactive dashboard demonstrating the features of the Margin Protection Program. The MPP-Dairy dashboard is fully interactive and functions on Internet browsers supporting Adobe Flash and Shockwave players. MPP-Dairy dashboard users may adjust key decision variables, such as the coverage year (using 2000-2013 data), coverage level, coverage percentage, and production history to illustrate how the program is designed to perform.
Understanding how MPP-Dairy is designed to work as a risk management tool in different milk and feed price environments is important because MPP-Dairy choices are not five-year decisions. Rather, dairy farmers can change their coverage options each calendar year. Given that there are nine coverage levels and 14 coverage percentage options, each year a participating dairy operation may choose from as many as 126 coverage combinations. As a result, this MPP-Dairy dashboard emphasizes the strategic thinking that needs to occur during each calendar year decision.
Source:uidaho.edu