California Ag Network

Tag: DMC

  • Dairy Producers Can Enroll for 2024 Dairy Margin Coverage

    Dairy producers are now able to enroll for 2024 Dairy Margin Coverage (DMC), an important safety net program offered through the U.S. Department of Agriculture (USDA) that provides producers with price support to help offset milk and feed price differences. This year’s DMC signup began Feb. 28, 2024, and ends April 29, 2024. For those who sign up for 2024 DMC coverage, payments may begin as soon as March 4, 2024, for any payments that triggered in January 2024.

    USDA’s Farm Service Agency (FSA) has revised the regulations for DMC to allow eligible dairy operations to make a one-time adjustment to established production history. This adjustment will be accomplished by combining previously established supplemental production history with DMC production history for those dairy operations that participated in Supplemental Dairy Margin Coverage during a prior coverage year. DMC has also been authorized through calendar year 2024. Congress passed a 2018 Farm Bill extension requiring these regulatory changes to the program.

    “FSA is announcing the sign up for 2024 Dairy Margin Coverage. We encourage producers to enroll in this important safety net program. In reviewing 2023 margins and the more than $1.2 billion in Dairy Margin Coverage payments issued to producers, Dairy Margin Coverage is proven to be a program to reduce risk for our dairy producers,” said FSA Administrator Zach Ducheneaux. “If 2023 taught us anything, it’s that we honestly have no idea what will happen in the market in any given year. Producers who took advantage of this affordable risk management tool for the 2023 program year, were able to mitigate some financial impacts on their operations. At $0.15 per hundredweight for $9.50 coverage, risk protection through Dairy Margin Coverage is a relatively inexpensive investment in a true sense of security and peace of mind.”

    DMC is a voluntary risk management program that offers protection to dairy producers when the difference between the all-milk price and the average feed price (the margin) falls below a certain dollar amount selected by the producer.  In 2023, Dairy Margin Coverage payments triggered in 11 months including two months, June and July, where the margin fell below the catastrophic level of $4.00 per hundredweight, a first for Dairy Margin Coverage or its predecessor Margin Protection Program.

    2024 DMC Coverage and Premium Fees 

    FSA has revised DMC regulations to extend coverage for calendar year 2024, which is retroactive to Jan. 1, 2024, and to provide an adjustment to the production history for dairy operations with less than 5 million pounds of production. In previous years, smaller dairy operations could establish a supplemental production history and receive Supplemental Dairy Margin Coverage. For 2024, dairy producers can establish one adjusted base production history through DMC for each participating dairy operation to better reflect the operation’s current production.

    For 2024 DMC enrollment, dairy operations that established supplemental production history through Supplemental Dairy Margin Coverage for coverage years 2021 through 2023, will combine the supplemental production history with established production history for one adjusted base production history.

    For dairy operations enrolled in 2023 DMC under a multi-year lock-in contract, lock-in eligibility will be extended until Dec. 31, 2024. In addition, dairy operations enrolled in multi-year lock-in contracts are eligible for the discounted DMC premium rate during the 2024 coverage year. To confirm 2024 DMC lock-in coverage or opt out in favor of an annual contract for 2024, dairy operations having lock-in contracts must enroll during the 2024 DMC enrollment period.

    DMC offers different levels of coverage, even an option that is free to producers, minus a $100 administrative fee. The administrative fee is waived for dairy producers who are considered limited resource, beginning, socially disadvantaged or a military veteran. To determine the appropriate level of DMC coverage for a specific dairy operation, producers can use the online dairy decision tool.

    DMC Payments

    DMC payments are calculated using updated feed and premium hay costs, making the program more reflective of actual dairy producer expenses.  These updated feed calculations use 100% premium alfalfa hay.

    More Information

    USDA also offers other risk management tools for dairy producers, including the Dairy Revenue Protection (DRP) plan that protects against a decline in milk revenue (yield and price) and the Livestock Gross Margin (LGM) plan, which provides protection against the loss of the market value of milk minus the feed costs. Both DRP and LGM livestock insurance policies are offered through the Risk Management Agency. Producers should contact their local crop insurance agent for more information.

    For more information on DMC, visit the DMC webpage or contact your local USDA Service Center.

  • 2023 Dairy Margin Coverage Deadline Extended to Jan. 31

    The U.S. Department of Agriculture (USDA) has extended the deadline for producers to enroll in Dairy Margin Coverage (DMC) and Supplemental Dairy Margin Coverage (SDMC) for program year 2023 to Jan. 31, 2023.

    DMC is a voluntary risk management program that offers protection to dairy producers when the difference between the all-milk price and the average feed price (the margin) falls below a certain dollar amount selected by the producer.

    “We recognize this is a busy time of year with many competing priorities, so we’ve extended the DMC enrollment deadline to ensure every producer who wants coverage for 2023 has the opportunity to enroll in the program,” said Farm Service Agency (FSA) Administrator Zach Ducheneaux. “Early projections indicate DMC payments are likely to trigger for the first eight months in 2023. We all know that markets fluctuate, sometimes at a moment’s notice and sometimes with no warning at all, so now’s the time to ensure your operation is covered. Please don’t let this second chance slide.”

    Nearly 18,000 operations that enrolled in DMC for 2022 have received margin payments for August and September for a total of $76.3 million. At $0.15 per hundredweight for $9.50 coverage, risk coverage through DMC is a relatively inexpensive investment.

    DMC offers different levels of coverage, even an option that is free to producers, aside from a $100 administrative fee. Limited resource, beginning, socially disadvantaged, and military veteran farmers and ranchers are exempt from paying the administrative fee, if requested. To determine the appropriate level of DMC coverage for a specific dairy operation, producers can use the online dairy decision tool.

    Supplemental DMC 

    Last year, USDA introduced Supplemental DMC, which provided $42.8 million in payments to better help small- and mid-sized dairy operations that had increased production over the years but were not able to enroll the additional production. Supplemental DMC is also available for 2023.  The enrollment period for 2023 Supplemental DMC is also extended to Jan. 31, 2023.

    Supplemental DMC coverage is applicable to calendar years 2021, 2022 and 2023.  Eligible dairy operations with less than 5 million pounds of established production history may enroll supplemental pounds.

    For producers who enrolled in Supplemental DMC in 2022, the supplemental coverage will automatically be added to the 2023 DMC contract that previously established a supplemental production history.

    Producers who did not enroll in Supplemental DMC in 2022 can do so now. Producers should complete their Supplemental DMC enrollment before enrolling in 2023 DMC. To enroll, producers will need to provide their 2019 actual milk marketings, which FSA uses to determine established production history.

    DMC Payments 

    FSA will continue to calculate DMC payments using updated feed and premium hay costs, making the program more reflective of actual dairy producer expenses.  These updated feed calculations use 100% premium alfalfa hay rather than 50%.

    For more information on DMC, visit the DMC webpage or contact your local USDA Service Center.

  • Deadline Extended to Enroll in 2022 Dairy Margin and Supplemental Coverage

    USDA has extended the deadline to enroll in Dairy Margin Coverage (DMC) and Supplemental Dairy Margin Coverage (SDMC) for program year 2022. The deadline to apply for 2022 coverage is now March 25, 2022. As part of the Biden-Harris Administration’s ongoing efforts to support dairy farmers and rural communities, USDA’s Farm Service Agency (FSA) opened DMC and SDMC signup in December 2021 to help producers manage economic risk brought on by milk price and feed cost disparities.

    “Over the past two years, American dairy farmers have faced unprecedented uncertainty, from the ongoing pandemic to protracted natural disasters. As producers continue to manage these interconnected challenges, FSA has tools at the ready to provide critical support,” said FSA Administrator Zach Ducheneaux. “We are encouraging dairy operations to take advantage of the extended deadline and join the 8,969 operations that have already enrolled for 2022 coverage. At 15 cents per hundredweight at the $9.50 level of coverage, DMC is a very cost-effective risk management tool for dairy producers.”

    Enrollment for 2022 DMC is currently at 55% of the 2021 program year enrollment. Producers who enrolled in DMC for 2021 received margin payments each month, January through November for a total of $1.2 billion, with an average payment of $60,275 per operation.

    The DMC program, created by the 2018 Farm Bill, offers reasonably priced protection to dairy producers when the difference between the all-milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer. Supplemental DMC will provide $580 million to better help small- and mid-sized dairy operations that have increased production over the years but were not able to enroll the additional production. Now, they will be able to retroactively receive payments for that supplemental production. Additionally, FSA updated how feed costs are calculated, which will make the program more reflective of dairy producers’ actual expenses.

    Supplemental DMC Enrollment

    Eligible dairy operations with less than 5 million pounds of established production history may enroll supplemental pounds based upon a formula using 2019 actual milk marketings, which will result in additional payments. Producers will be required to provide FSA with their 2019 Milk Marketing Statement.

    Supplemental DMC coverage is applicable to calendar years 2021, 2022 and 2023. Participating dairy operations with supplemental production may receive retroactive supplemental payments for 2021 in addition to payments based on their established production history.

    Supplemental DMC will require a revision to a producer’s 2021 DMC contract and must occur before enrollment in DMC for the 2022 program year. Producers will be able to revise 2021 DMC contracts, apply for 2022 DMC, and enroll in other FSA programs by contacting their local USDA Service Center.

    DMC 2022 Enrollment

    After making any revisions to 2021 DMC contracts for Supplemental DMC, producers can sign up for 2022 coverage. DMC provides eligible dairy producers with risk management coverage that pays producers when the difference between the price of milk and the cost of feed falls below a certain level. In 2021, based on data to date, DMC payments have triggered for January through November for more than $1 billion.

    For DMC enrollment, producers must certify with FSA that the operation is commercially marketing milk, sign all required forms and pay the $100 administrative fee. The fee is waived for farmers who are considered limited resource, beginning, socially disadvantaged, or a military veteran. To determine the appropriate level of DMC coverage for a specific dairy operation, producers can use the online dairy decision tool.

    Updates to Feed Costs

    USDA has also changed the DMC feed cost formula via final rule published on December 13, 2021, to better reflect the actual cost dairy farmers pay for high-quality alfalfa hay.  FSA now calculates payments using 100% premium alfalfa hay rather than 50%. In December 2021, following publication of the new feed cost policy, $102 million was paid to producers as a result of the revised high quality alfalfa feed cost formula.

    The amended feed cost formula will make DMC payments more reflective of actual dairy producer expenses.

    More Information

    For more information, producers can visit the FSA dairy programs webpage, or contact their local USDA Service Center. To locate their local FSA office, producers can visit farmers.gov/service-center-locator. Service Center staff continue to work with agricultural producers via phone, email, and other digital tools. Due to the pandemic, some USDA Service Centers are open to limited visitors.  Additionally, more information related to USDA’s response and relief for producers can be found at  farmers.gov/coronavirus

  • USDA and Dairy Farmers Work Together to Mitigate Risk for 2021

    In an unprecedented year, USDA staff and dairy producers across the country worked together to protect dairy operations for the 2021 production year under USDA’s risk management program options – the Dairy Margin Coverage (DMC), Dairy Revenue Protection (DRP), and Livestock Gross Margin for Dairy Cattle (LGM) programs. Recent enrollment data for these programs indicate that dairy operations are proactively managing their risk.

    “In a year rife with challenges, our staff worked diligently to improve customer service and seamlessly deliver programs to assist agricultural producers,” said Bill Northey, USDA’s Under Secretary for Farm Production and Conservation. “Through patience and perseverance on both sides of the virtual counter, as well as added resources made available to producers and staff for operating in a pandemic, producers were able to timely participate in these programs.”

    Dairy Margin Coverage

    Administered by USDA’s Farm Service Agency, DMC offers protection to dairy producers when the difference between the all-milk price and the average feed price (the margin) falls below a certain dollar amount selected by the producer.

    Nearly three-quarters of all U.S. dairy operations with established production history are enrolled in DMC for the 2021 program year. Compared with 2020 enrollment of 13,532 operations, participation for 2021 increased to cover nearly 18,500 operations nationwide – meaning an additional 4,900 dairy operations recognized the value of DMC to their bottom line.

    This enrollment success is a testament to the value of DMC to dairy operations. DMC is a cashflow-friendly program that offers enrolled operations the option to select a $4.00 catastrophic level of coverage with no premium fee or elect to buy up coverage. The premium on buy-up coverage is based on margin triggers between $4.50 and $9.50 on 5 to 95% of established production history. For coverage at the maximum margin trigger of $9.50, producers pay $0.15 per hundredweight of established milk production history.

    To date, DMC has paid out more than $500 million in program benefits to dairy operations enrolled in calendar years 2019 and 2020. Margin payments triggered seven months in 2019 and four months, to date, for the 2020 DMC program year.

    Additional Protection for Dairy

    Approximately 3,000 operations purchased additional protection under DRP, which covers 30% of the milk supply and has provided more than $400 million in payments to covered operations since 2019. DRP, now in its second year, has grown from 2,500 policies in 2019. Additionally, 200 producers purchased coverage through LGM. Both LGM and DRP are managed by USDA’s Risk Management Agency.

    While DRP insures against unexpected declines in the quarterly revenue from milk sales, LGM provides protection against the loss of gross margin (market value of milk minus feed costs) on the milk produced from dairy cows.

    More Information

    Enrollment for 2022 coverage for DMC will take place in the fall of 2021. For more information about DMC and to use the online program decision tool, visit the farmers.gov DMC webpage, or contact your local USDA Service Center. To locate your local office, visit farmers.gov/service-center-locator.

    All Federal crop insurance policies are available from Approved Insurance Providers (AIP). To learn more about DRP and LGM and other crop and livestock insurance products, contact your local AIP. A list of AIPs is available at all USDA service centers and on the RMA website at the Agent Locator Page.

    All USDA Service Centers are open for business, including those that restrict in-person visits or require appointments. All Service Center visitors wishing to conduct business with FSA, Natural Resources Conservation Service, or any other Service Center agency should call ahead and schedule an appointment. Service Centers that are open for appointments will pre-screen visitors based on health concerns or recent travel, and visitors must adhere to social distancing guidelines. Visitors are also required to wear a face covering during their appointment. Our program delivery staff will continue to work with our producers by phone, email, and using online tools. More information on working with our Service Centers can be found at farmers.gov/coronavirus

    USDA is an equal opportunity provider, employer and lender.

  • Dairy Margin Coverage Program Enrollment Now Open for 2021

    The U.S. Department of Agriculture (USDA) has begun accepting applications for the Dairy Margin Coverage (DMC) program as of Tuesday, October 13, 2020 for 2021 enrollment.

    “This year has been a market roller coaster for the dairy industry, and the Dairy Margin Coverage program is a valuable tool dairy producers can use to manage risk,” said Bill Northey, USDA’s Under Secretary for Farm Production and Conservation, during a roundtable at a dairy in Chippewa Falls, Wisconsin. “We were excited to roll out this new and improved program through the 2018 Farm Bill, and if you haven’t enrolled in previous years, we highly encourage you to check it out.”

    Signup runs through Dec. 11, 2020. DMC is a voluntary risk management program that offers protection to dairy producers when the difference between the all-milk price and the average feed price (the margin) falls below a certain dollar amount selected by the producer. DMC payments triggered for seven months in 2019 and three months so far in 2020.  More than 23,000 operations enrolled in DMC in 2019, and more than 13,000 in 2020.

    Updated Dairy Decision Tool

    To determine the appropriate level of coverage for a specific dairy operation, producers can utilize the recently updated online dairy decision tool. The decision tool is designed to assist producers with calculating total premium costs and administrative fees associated with participation in DMC. An informational video is available, too.

    Improvements to the decision tool, made in cooperation with representatives from the University of Minnesota and University of Wisconsin, include historical analysis that illustrates what DMC indemnity payments might have been had the program been available over the previous two decades.  The analysis indicates that over the course of time, DMC payments made to producers exceed premiums paid. These decision tool enhancements provide a more comprehensive decision support experience for producers considering DMC.

    Additional Support for Dairy Producers 

    In addition to DMC, USDA offers a variety of programs that have helped dairy producers, including insurance, disaster assistance, and conservation programs. Most recently, the Coronavirus Food Assistance Program 1 provided $1.75 billion in direct relief to dairy producers who faced price declines and additional marketing costs due to COVID-19 in early 2020. Now, signup is underway for the Coronavirus Food Assistance Program 2, which provides another round of assistance for dairy producers and many other eligible producers.

    More Information 

    For more information, visit farmers.gov DMC webpage, or contact your local USDA Service Center. To locate your local FSA office, visit farmers.gov/service-center-locator.

    All USDA Service Centers are open for business, including some that are open to visitors to conduct business in person by appointment only. All Service Center visitors wishing to conduct business with the FSA, Natural Resources Conservation Service, or any other Service Center agency should call ahead and schedule an appointment. Service Centers that are open for appointments will pre-screen visitors based on health concerns or recent travel, and visitors must adhere to social distancing guidelines. Visitors are required to wear a face covering during their appointment. Field work will continue with appropriate social distancing. Our program delivery staff will be in the office, and they will be working with our producers in office, by phone, and using online tools. More information can be found at farmers.gov/coronavirus.

  • USDA Dairy Safety-Net Program Signup to Begin October 12

    The U.S. Department of Agriculture’s Farm Service Agency (FSA) announces that Dairy Margin Coverage (DMC) safety-net signup for 2021 coverage will begin October 12 and will run through December 11, 2020. DMC has already triggered payments for two months for producers who signed up for 2020 coverage.

    “If we’ve learned anything in the past six months, it’s to expect the unexpected,” said FSA Administrator Richard Fordyce. “Nobody would have imagined the significant impact that current, unforeseen circumstances have had on an already fragile dairy market. It’s during unprecedented times like these that the importance of offering agricultural producers support through the delivery of Farm Bill safety-net programs such as DMC becomes indisputably apparent.”

    The April 2020 income over feed cost margin was $6.03 per hundredweight (cwt.), triggering the second payment of 2020 for dairy producers who purchased the appropriate level of coverage under the Dairy Margin Coverage (DMC) program. The April margin reflects a more than a $3 drop from the March $9.15 cwt. income over feed cost margin.

    As of June 15, FSA has issued more than $100 million in much-needed program benefits to dairy producers who purchased DMC coverage for 2020.

    Authorized by the 2018 Farm Bill, DMC is a voluntary risk management program that offers protection to dairy producers when the difference between the all-milk price and the average feed price (the margin) falls below a certain dollar amount selected by the producer. Over 13,000 operations enrolled in the program for the 2020 calendar year.

    All USDA Service Centers are open for business, including some that are open to visitors to conduct business in person by appointment only. All Service Center visitors wishing to conduct business with the Farm Service Agency, Natural Resources Conservation Service, or any other Service Center agency should call ahead and schedule an appointment. Service Centers that are open for appointments will pre-screen visitors based on health concerns or recent travel and visitors must adhere to social distancing guidelines. Visitors may also be required to wear a face covering during their appointment. Field work will continue with appropriate social distancing. Our program delivery staff will be in the office, and they will be working with our producers in office, by phone, and using online tools. More information can be found at farmers.gov/coronavirus.

    For more information, visit farmers.gov DMC webpage or contact your local USDA service center. To locate your local FSA office, visit farmers.gov/service-center-locator.

  • USDA Announces March Income over Feed Cost Margin Triggers Third 2019 Dairy Safety Net Payment

    WASHINGTON, May 7, 2019 — USDA’s Farm Service Agency (FSA) announced last week that the March 2019 income over feed cost margin was $8.85 per hundredweight (cwt.), triggering the third payment for dairy producers who purchase the appropriate level of coverage under the new Dairy Margin Coverage (DMC) program.

    DMC, which replaces the Margin Protection Program for Dairy (MPP-Dairy), offers protection to dairy producers when the difference between the all milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer.

    “I encourage all dairy operations to sign up for DMC when we begin accepting applications in June,” said FSA Administrator Richard Fordyce. “Under certain coverage levels, the amount to be paid to dairy farmers for the months of January, February and March already exceed the cost of the premium.”

    The signup period for DMC opens June 17, 2019. Dairy producers who elect a DMC coverage level between $9 and $9.50 would be eligible for a payment for January, February and March 2019.

    For example, a dairy operation that chooses to enroll an established production history of 3 million pounds (30,000 cwt.) and elects the $9.50 coverage level on 95 percent of production would receive $1,543.75 for March

    Sample calculation:

    $9.50 – $8.85 margin = $0.65 difference

    $0.65 x 95 percent of production x 2,500 cwt. (30,000 cwt./12) = $1,543.75

    DMC premiums are paid annually. The calculated annual premium for coverage at $9.50 on 95 percent of a 3-million-pound production history for this example would be $4,275.

    Sample calculation:

    3,000,000 x 95 percent = 2,850,000/100 = 28,500 cwt. x 0.150 premium fee = $4,275

    The dairy operation in the example calculation will pay $4,275 in total premium payments for all of 2019 and receive $8,170 in DMC payments for January, February and March combined. Additional payments will be made if calculated margins remain below the $9.50/cwt level.

    All participants are also required to pay an annual $100 administrative fee in addition to any premium, and payments will be subject to a 6.2 percent reduction to account for federal sequestration.

    Operations making a one-time election to participate in DMC through 2023 are eligible to receive a 25 percent discount on their premium for the existing margin coverage rates. For the example above, this would reduce the annual premium by $1,068.75.

    About DMC

    On December 20, 2018, President Trump signed into law the 2018 Farm Bill, which provides support, certainty and stability to our nation’s farmers, ranchers and land stewards by enhancing farm support programs, improving crop insurance, maintaining disaster programs and promoting and supporting voluntary conservation. FSA is committed to implementing these changes as quickly and effectively as possible, and today’s updates are part of meeting that goal.

    Recently, FSA announced the availability of the DMC decision support tool as well as repayment options for producers who were enrolled in MPP-Dairy.

    For DMC signup, eligibility and related dairy program information, visit the DMC webpage or contact your local USDA service center. To locate your local FSA office, visit farmers.gov/service-locator.

    USDA is an equal opportunity provider, employer and lender.

    …Dairy Margin Coverage Program Sign-Up Begins June 17…