Dairymen, two online tools can help with Margin Protection Program choice

SALEM, Ohio — There are two new online tools designed to help dairy producers understand coverage options under the new Margin Protection Program.

The U.S. Department of Agriculture’s Farm Service Agency recently announced the launch of the Margin Protection Program for dairy producers. The program is a voluntary dairy safety net program that replaces the farm bill’s previous milk price and revenue support programs.

The program took effect Sept. 1 and program enrollment began Sept. 2. Farmers have until Nov. 28 to obtain coverage either for the remainder of 2014, all of calendar year 2015, or both.

Producers will insure their operations on a sliding scale, deciding both how much of their milk production to cover and how much of a margin to protect. Basic margin insurance at $4 per hundredweight is available for a $100 registration fee. Above the $4 level, a premium is required.

Calculate costs

Ohio State University dairy economist Cameron Thraen helped develop one of the new tools, as part of a team of researchers from the University of Illinois, the University of Wisconsin, the University of Minnesota, Michigan State University, Cornell University and The Pennsylvania State University.

Use the tools:

The primary Margin Protection Program online tool can be accessed at:
www.fsa.usda.gov/mpptool
www.dairymarkets.org/MPP
www.farmdoc.illinois.edu/farmbilltoolbox

The National Milk Producers Federation calculator is located at www.futurefordairy.com/mpp-calculator

The four-step tool is easy to use, Thraen said. It helps producers calculate total premium costs and administrative fees associated with the program, as well as forecast MPP payments that will be made during the coverage year and the total MPP benefit that the producer can anticipate, he said.

The National Milk Producers Federation has also launched an online, downloadable calculator to help farmers select coverage levels under the program.

The National Milk Producers Federation calculator is designed to complement the tool created by the consortium of land grant universities. A key difference between the two tools is that NMPF’s is available both online, and as a downloadable Excel file.

Also, while the USDA tool is pre-programmed with market forecasts from the Chicago Mercantile Exchange, the NMPF tool allows farmers to input their own projections for milk as well as corn, soybean meal and alfalfa hay prices.

Better manage risk

“The new Margin Protection Program should be viewed as new opportunity to effectively and affordably manage farm income volatility and market risk, and to avoid the catastrophic financial outcomes that played out in 2009 and again in 2012,” Thraen said.

In using the MPP online tool, producers can also access a tool to make decisions regarding the Livestock Gross Margin-Dairy insurance program, also in the farm bill, Thraen said.