USDA Announces Decision Tool for New Dairy Margin Coverage Program

An organic farm in Tompkins County, NY.
Photo by Fay Benson

A new web-based tool will help dairy producers evaluate various scenarios using different coverage levels through the new Dairy Margin Coverage (DMC) program.

The DMC is 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 was authorized in the 2018 Farm Bill, and replaces the program previously known as the Margin Protection Program for Dairy. Sign up opens on June 17 for the DMC program of the USDA Farm Service Agency (FSA).

“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,” Agriculture Secretary Sonny Perdue said in a press release. “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.”

According to the USDA, the tool was designed to help producers determine the level of coverage that provides them the strongest financial safety net. Producers can use the tool to calculate total premiums costs and administrative fees associated with participation in DMC. The tool also forecasts payments made during the coverage year.

The tool was developed in partnership with the University of Wisconsin.

“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,” Dr. Mark Stephenson, Director of Dairy Policy Analysis, University of Wisconsin, Madison, said in the same press release. “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.