Projected Payments

Signups began earlier this week for the Dairy Margin Coverage program, the 2018 farm bill's replacement for the Margin Protection Program. Market Intel already conducted an in-depth review of DMC, but it is helpful to provide a brief overview of the program.

An improvement on MPP, DMC is a voluntary program that makes payments when the national average income-over-feed-cost margin falls below a farmer-selected coverage level. Coverage is available from $4 per hundredweight to as high as $9.50 per hundredweight, and dairy producers pay premiums for coverage. Program payments may be triggered monthly and are made if the DMC margin falls below the farmer's elected coverage level. Program payments are based on the amount of milk covered in the program and may range from 5% to 95% of a farm's milk production history in 5% increments. The program has two tiers; Tier I covers up to 5 million pounds and has more affordable premiums than Tier II, which covers any milk over the first 5 million pounds. A farmer can enroll milk in Tier II at a different coverage level than Tier I. When a farm enrolls in DMC they may receive a 25% premium discount if they make a one-time election for both the coverage level and the amount of milk enrolled in the program. Many farmers wonder how DMC would have performed had it been in effect in recent years.