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Farmers can apply for critical Dairy Margin Coverage

Farmers can apply for critical Dairy Margin Coverage

WASHINGTON—The enrollment period for the 2022 Dairy Margin Coverage program has opened, and dairy farmers who wish to participate have until Feb. 18 to submit applications.

Administered by the U.S. Department of Agriculture’s Farm Service Agency, the DMC makes payments to participating dairies when the national milk price-over-feed cost margin falls below a specific level. From January through October 2021, DMC payments have totaled $1 billion.

Casey Phillips, a dairy farmer and owner of Dry Valley Farms in Montgomery County, participates in the DMC and said programs like this are an important safety net.

“As a dairy farmer, everything is kind of a gamble,” said Phillips, president of Montgomery County Farm Bureau and a member of Virginia Farm Bureau Federation’s Dairy Advisory Committee. “We don’t know exactly what we’re going to get paid for the milk that we produce today, until a month from now.”

He added that rising inflation combined with the challenges of the pandemic have been a further hardship on Virginia dairies.

“The last couple years, dairy prices have been down, and all of our feed and operating costs have been up,” he lamented. “If it wasn’t for those (DMC) payments, it would have been very tough.”

New for the 2022 DMC program is a supplemental DMC, which will provide $580 million to help small and mid-size dairies that have increased production over the years but weren’t able to enroll the additional production. Now, they’ll be able to retroactively receive payments for the supplemental production.

Tony Banks, senior assistant director of agriculture, development and innovation for VFBF, explained that when working with a highly perishable product, dairies don’t have the ability to store their product until prices improve or stop feeding their herds because of high feed costs.

“On-farm milk production decisions with respect to the cows are made a year in advance and may not align with current farm milk prices,” he noted. “Over the last 20 years, U.S. dairy exports and currency exchange rates are having an increasing influence on U.S. farm milk prices. While exports have provided additional markets for U.S. dairymen, they have also added increased milk price volatility.”

In addition, dairies who participate in the DMC program at the tier 1 level are eligible for the new Virginia Dairy Producers Margin Coverage Premium Assistance program. This program was established earlier this year by the Virginia Department of Agriculture and Consumer Services and reimburses dairies for the premium payments they have made to the federal program.

“Virginia’s premium cost-share program helps offset premium costs for dairy farmers that participate in DMC above its basic catastrophic level,” Banks explained. “Dairy margins have been very tight in recent years, making it difficult for producers to participate in the DMC.”

Farmers who wish to sign up for the DMC program can visit their local USDA Service Center.

Media: Contact Phillips at 540-230-3078 or Banks at 804-290-1114.