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Federal spending bill strengthens dairy safety net

The bill offers benefits for smaller producers through changes to the Dairy Margin Protection Program and helps larger producers by raising the cap on livestock insurance products.
Carol Ryan Dumas

Capital Press

Published on February 12, 2018 8:27AM

The federal spending bill Congress passed late last week will benefit dairy farms of all sizes, industry officials say.

Capital Press File

The federal spending bill Congress passed late last week will benefit dairy farms of all sizes, industry officials say.

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The Bipartisan Budget Act passed by Congress and signed by President Donald Trump includes provisions to improve the safety net for dairy producers large and small.

Changes to the Dairy Margin Protection Program mostly benefit smaller producers, while a lifting of the cap on livestock insurance products addresses the needs of larger producers.

“The enhancement to the Margin Protection Program, coupled with the expansion of additional risk-management options, are coming at a crucial time for our producers,” Jim Mulhern, president and CEO of National Milk Producers Federation, said in a statement Friday.

The disaster assistance package in the bill will create $1.2 billion in baseline spending for the next farm bill, paving the way for additional improvements to MPP. It also lifts the $20 million cap on all livestock insurance, including the Livestock Gross Margin program.

“Farmers need insurance options that are both effective and affordable, and the disaster package helps deliver on that promise,” Mulhern said.

The MPP reforms include raising the fully subsidized catastrophic coverage level from a $4 per hundredweight margin between the price of milk and the cost of feed to $5. They also include adjusting the first tier of covered milk production to the first 5 million pounds of annual milk production — which represents production from about 217 cows — from the current 4 million pounds.

Premium rates would also be reduced for the first 5 million pounds so producers can afford higher levels of coverage. Margin calculations would be changed to a monthly basis from the current bi-monthly average to make the program more accurate and responsive to producers in difficult months.

The reforms, however, do not include any change to the national feed-cost calculation, which producers have argued is significantly lower than their actual costs. That calculation has led to program margins that are significantly higher than actual margins and resulted in few payouts.

The lifting of the cap on livestock insurance will allow USDA to develop a wider variety of additional risk-management tools that will be especially important to larger dairy producers and can complement MPP, Mulhern said.

“Taken together, these changes will provide important risk-management tools for dairy operations of all sizes,” he said.

Rick Naerebout, CEO of the Idaho Dairymen’s Association, said the bill has “something for everyone in dairy in regard to safety nets.”

It offers some additional benefits to smaller producers through MPP in additional dollars to subsidize premiums. But the production caps favor smaller producers.

Removing the cap on livestock insurance products was something lawmakers were able to get for larger producers.

“Basically, it’s crop insurance for milk,” similar to what other agricultural entities have had for years, he said.

Idaho has both small and large producers and needs solutions for operations of all sizes, he said.

The insurance opportunities, such as Livestock Gross Margin, appeal to IDA because they don’t differentiate between smaller and larger dairies to create winners and losers, he said.


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