California Dairies Watch Safety Net Debate
California is the nation’s top dairy-producing state, so conversations about dairy safety net programs carry extra weight here at home.
The Dairy Margin Coverage Program helps producers manage risk when the gap between milk prices and feed costs gets too tight. Danny Munch, economist with the American Farm Bureau Federation, says it remains an important tool for dairies.
“Farmers choose a coverage level at 50 cent increments, up to $9.50, and the program will pay out to farmers when the national dairy margin falls below the selected level they chose. There's currently a six-million-pound production capped under the more affordable Tier One level, and really it's the best safety net out there for dairy producers to protect their margins.”
But Munch says the formula does not account for several rising costs dairies continue facing.
“Labor, fuel, veterinary costs, and equipment, which, combined, have risen over 21 percent in the last five years. So, in recent months, particularly in the second half of 2025, when feed costs were low but these other costs were high, the program did not trigger, even though many dairies were unable to cover costs.”
Munch says dairy industry stakeholders are now discussing ways to make the program “more adaptable moving forward.” More information is available on the Market Intel page at fb.org.
