California Ag Network

Tag: Secretary Sonny Perdue

  • USDA Announces New Decision Tool for New Dairy Margin Coverage Program

    WASHINGTON, April 30, 2019 — Agriculture Secretary Sonny Perdue announced today the availability of a new web-based tool – developed in partnership with the University of Wisconsin – to help dairy producers evaluate various scenarios using different coverage levels through the new Dairy Margin Coverage (DMC) program.

    The 2018 Farm Bill authorized DMC, a voluntary risk management program that offers financial 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. It replaces the program previously known as the Margin Protection Program for Dairy. Sign up for this USDA Farm Service Agency (FSA) program opens on June 17.

    “With sign-up for the DMC program just weeks away, we encourage producers to use this new support tool to help make decisions on participation in the program,” Secretary Perdue said.  “Dairy producers have faced tough challenges over the years, but the DMC program should help producers better weather the ups and downs in the industry.”

    The University of Wisconsin launched the decision support tool in cooperation with FSA and funded through a cooperative agreement with the USDA Office of the Chief Economist. The tool was designed to help producers determine the level of coverage under a variety of conditions that will provide them with the strongest financial safety net. It allows farmers to simplify their coverage level selection by combining operation data and other key variables to calculate coverage needs based on price projections.

    The decision tool assists producers with calculating total premiums costs and administrative fees associated with participation in DMC. It also forecasts payments that will be made during the coverage year.

    “The new Dairy Margin Coverage program offers very appealing options for all dairy farmers to reduce their net income risk due to volatility in milk or feed prices,” said Dr. Mark Stephenson, Director of Dairy Policy Analysis, University of Wisconsin, Madison. “Higher coverage levels, monthly payments, and more flexible production coverage options are especially helpful for the sizable majority of farms who can cover much of their milk production with the new five million pound maximum for Tier 1 premiums. This program deserves the careful consideration of all dairy farmers.”

    For more information, access the tool at fsa.usda.gov/dmc-tool. For DMC sign up, eligibility and related program information, visit fsa.usda.gov or contact your local USDA Service Center. To locate your local FSA office, visit farmers.gov/service-locator.

    Contact: FPAC.BC.Press@usda.gov

     

  • Enrollment Expected to Begin this Summer

    The U.S. Department of Agriculture’s Farm Service Agency (FSA) announced last week that the January 2019 income over feed cost margin was $7.99 per hundredweight, triggering the first payment for eligible dairy producers who purchase the appropriate level of coverage under the new but yet-to-be established Dairy Margin Coverage (DMC) program.

    DMC, which replaces the Margin Protection Program for Dairy, is a voluntary risk management program for dairy producers that was authorized by the 2018 Farm Bill. DMC 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.

    Agriculture Secretary Sonny Perdue announced last week that sign up for DMC will open by mid-June of this year.  At the time of sign up, producers who elect a DMC coverage level between $8.00 and $9.50 would be eligible for a payment for January 2019.

    For example, a dairy operation with an established production history of 3 million pounds (30,000 cwt.) that elects the $9.50 coverage level for 50 percent of its production could potentially be eligible to receive $1,887.50 for January.

    Sample calculation:

    $9.50 – $7.99 margin = $1.51 difference

    $1.51 times 50 percent of production times 2,500 cwt. (30,000 cwt./12) = $1,887.50

    The calculated annual premium for coverage at $9.50 on 50 percent of a 3-million-pound production history for this example would be $2,250.

    Sample calculation:

    3,000,000 times 50 percent = 1,500,000/100 = 15,000 cwt. times 0.150 premium fee = $2,250

    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.

    “Congress created the Dairy Margin Coverage program to provide an important financial safety net for dairy producers, helping them weather shifting milk and feed prices,” FSA Administrator Richard Fordyce said. “This program builds on the previous Margin Protection Program for Dairy, carrying forward many of the program upgrades made last year based on feedback from producers. We’re working diligently to implement the DMC program and other FSA programs authorized by the 2018 Farm Bill.”

    Additional details about DMC and other FSA farm bill program changes can be found at farmers.gov/farmbill.

  • Western United Dairymen on USDA Aid Announcement for International Trade Dispute

    WUD applauds USDA Secretary Sonny Perdue’s actions announced today to try to mitigate the impact international trade disputes are having on California’s dairy farm families. The Department announced a three-prong plan to mitigate the impact of retaliatory tariffs on various agricultural commodities including payments to producers, product purchase and donation and assistance with developing new export markets.

    The combination of payments to help dairy producers manage cash flow, product purchase and donation to help keep inventories in check in light of reduced export demand and resources to help develop other export markets will be welcome news in our industry.

    WUD looks forward to working with USDA staff to quantify the economic damage inflicted on California’s dairy farm families as a result of the reset of international trading relationships on products other than dairy. Our producers should be able to expect compensation to equal the harm they’ve suffered. WUD staff will help quantify that economic impact in the approximately six weeks between now and the expected rollout of the program on September 4th.

    California’s dairy producers have invested heavily in developing export markets for their products for more
    than two decades. Their success in building dairy exports leaves our state’s industry more vulnerable than
    most to volatility in foreign markets. That is another factor WUD will emphasize with USDA as details are finalized for these new trade assistance initiatives for farmers announced today.

    Properly implemented the assistance announced today could help farmers through in the short term, assist with the development of additional export markets over the next several months and help the White House maintain the support in rural America it needs to achieve its trade policy objectives.