The USDA has announced in a press conference Thursday morning that sign-ups for the new Dairy Margin Protection Program (MPP) will begin next week. Producers can begin signing up at their local FSA office beginning on September 2 and must sign up by November 28, 2014 to be covered for the 2015 production year. Future years will have a sign-up period from July 1 to September 30, and if the deadline is missed there will be no future opportunities to sign up for that year. One additional stipulation is that once a producer signs up, he/she will be enrolled until December 2018 when the program is set to end.
The Margin Protection Program is a safety net program that pays out when the actual dairy margins fall below a producer selected coverage level and is open to all dairy operations, regardless of size. There is a $100 administration fee due upon sign-up, and producers can choose a coverage level that guarantees a margin of between $4.00/cwt and $8.00/cwt. Producers can also choose to cover between 25% and 90% of their production history. Producers can choose a coverage level annually during the sign-up period, and the premium payment is due upon signing up. When signing up for the first time, two forms must be filled out. One form will establish the farm’s production history, while the second form will establish the coverage level and the amount of production covered.
Overall, the program appears to be a great, low-cost safety net for diary producers. Producers electing coverage for a $4.00 margin will pay only a $100 administration fee, with the premiums rising as coverage levels increase. The FSA has a very useful online resource to help producers select a coverage level at www.fsa.usda.gov/mpptool. An additional breakdown of what we knew about the MPP prior to Thursday morning’s press release can be found here. We will also be posting additional resources in the coming days to further break down the new Margin Protection Program and help producers determine the coverage level that will be best for them.