New dairy program offers protection

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The dairy industry has been the cornerstone of our local agricultural economy for decades. As with typical agricultural commodity products, the prices established for milk are driven by market supply and demand.

Ask any local dairy farmer and they will tell you how volatile the dairy industry can be.

New program

The 2014 Farm Bill initiated a new dairy risk management program to help dairy farms overcome the highs and lows of producing milk.

The new voluntary program is called the Dairy Margin Protection Program (MPP-Dairy) and will be in effect through Dec. 31, 2018.

Dairy farmers have until Nov. 28 to decide whether or not to participate in this program for the remainder of 2014 and 2015.

The MPP-Dairy program is operated through the USDA Farm Service Agency. The MPP-Dairy program offers protection to dairy producers when the difference between the all milk price and a calculated average feed cost (the margin) falls below a certain dollar amount selected by the producer.

A major difference between this program and past payment programs is that the MPP-Dairy is based on average national feed prices and milk prices.

It is not based on a producer’s personal operation. Farmers will have to determine how the national margin relates to their own farm’s margin.

Farmers can elect the extent of the coverage that they will need for their operation. The beginning level of coverage is considered Catastrophic Coverage (CAT).

This will trigger payments to dairy farms when the margin between milk prices and feed prices drops below $4 per hundredweight (cwt).

The highest amount of available coverage is 90 percent of the established production history from the farm.

So if a farm produces 1 million pounds of milk, then 900,000 pounds will be used to calculate a payment. This CAT requires farmers to only pay a $100 administrative fee to be a part of the program at this level.

Coverage

Dairy farmers can annually select a higher coverage. The coverage level ranges from $4 to $8, and the percentage of the milk production base production history that can be protected ranges from 25 percent to 90 percent.

It can be overwhelming to consider all the options and combinations of price points and percentages.

Workshops

Dairy producers can sign up online for the workshops (see chart) at http://go.osu.edu/2014dairyfarmbill.

There is no registration fee to attend any of these programs; however, pre-registrations are requested so that adequate handouts can be made. Check out http://dairy.osu.edu for additional information on the MPP-Dairy program.

To close today’s column, I would like to share a quote from Pat Summitt who said, “When you grow up on a dairy farm, cows don’t take a day off.”

So you work every day and my dad always said, ‘No one can outwork you.'” Have a good and safe day.

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