Federal budget bill revamps MPP to help dairy farmers

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Milking parlor
(Farm and Dairy photo)

SALEM, Ohio — The federal budget bill that President Donald Trump signed Feb. 9 includes specific reforms intended to help struggling dairy farmers.

The improvements are a step ahead of the 2018 farm bill, which lawmakers are still writing, and include changes to the dairy Margin Protection Program, also known as MPP.

The MPP helps compensate farmers when the margin between the average price for feed and the milk they sell falls to certain, pre-determined levels. The program was included in the last farm bill, but farmers have argued it did not serve them as well as intended.

Better coverage

The MPP changes in the budget legislation include raising the most basic, catastrophic level from $4 to $5, for the first tier of margin protection, and expanding the first tier of coverage from the first 4 million pounds, to 5 million.

The premium a farmer must pay is also being reduced, and the margin will now be calculated on a monthly basis, compared to every two months, which should result in quicker returns to the farmer, if the margin becomes low enough to trigger a payment.

“It sounds like they’re (policy makers) heading in an improved direction,” said Dianne Shoemaker, dairy specialist with Ohio State University Extension.

Numbers matter

But she cautioned that until the new premiums are known, a dairy farmer won’t really know how much the changes will help.

Although the basic-level margin protection is expanded, she said that even with low milk prices, we haven’t come anywhere close to the $5 margin protection being offered.

“Things are going to have to be really bad before that would come into play,” she said.

The improvements were part of a spending package announced by a bipartisan group of lawmakers, including Sen. Sherrod Brown, D-Cleveland, who serves on the Senate Ag Committee.

The disaster package also lifts the $20 million annual cap on all livestock insurance, including the Livestock Gross Margin program, which will allow the U.S. Department of Agriculture to develop a wider variety of risk management tools for larger producers.

The National Milk Producers Federation called the deal “an important victory for America’s dairy farmers.”

“The enhancements to the Margin Protection Program, coupled with the expansion of additional risk management options, are coming at a crucial time for our producers,” said Jim Mulhern, president of NMPF. “Farmers need insurance options that are both effective and affordable, and the disaster package helps deliver on that promise.”

All eyes are now be on the new farm bill, where farmers and policy makers are working on a long-term program that will better protect dairy farmers.

 

Related stories:

Should you utilize dairy margin protection?
September 28, 2017

Dairymen can opt out of Margin Protection Program without fee
August 31, 2017

Understanding the Margin Protection Program for Dairy
October 8, 2015

Dairy margin programs: what to know
November 27, 2014

Dairymen, two online tools can help with Margin Protection Program choice
September 9, 2014

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