Dairy Margin Protection

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By Jerry Hagstrom
DTN Political Correspondent

WASHINGTON (DTN) -- Agriculture Secretary Tom Vilsack announced Thursday that dairy producers enrolled in the 2016 Margin Protection Program for Dairy (MPP-Dairy) will get approximately $11.2 million in financial assistance.

The narrowing margin between milk prices and the cost of feed triggered the payments, as provided for by the 2014 farm bill.

"We understand the nation's dairy producers are experiencing challenges due to market conditions," said Vilsack. He added, "MPP-Dairy payments are part of a robust, comprehensive farm safety net that helps to provide dairy producing families with greater peace of mind during tough times."

Vilsack urged dairy producers to evaluate their enrollment options for 2017, as the enrollment period is currently scheduled to end Sept. 30. Dairy producers who enrolled at the $6 through $8 margin trigger coverage level will receive payments.

MPP-Dairy payments are triggered when the national average margin (the difference between the price of milk and the cost of feed) falls below a level of coverage selected by the dairy producer, ranging from $4 to $8, for a specified consecutive two-month period. All final USDA prices for milk and feed components required to determine the national average margin for May/June 2016 were released on July 29, 2016.

The national average margin for the May/June 2016 two-month consecutive period is $5.76277 per hundred weight (cwt), resulting in the following MPP payment rates (margin trigger coverage levels with the payment rate/cwt):

$6.00$0.23723
$6.50$0.73723
$7.00$1.23723
$7.50$1.73723
$8.00$2.23723

The payments come after senators and congressmen from major dairy-producing states sent a bipartisan letter to Vilsack last week expressing concerns about the "vulnerable position" of dairy producers. Lawmakers stated the dairy industry "is reeling from low prices, a glut of imports, challenges in our export markets, and poor economic growth ..." The senators and congressmen want USDA to use its existing authority to boost support for dairy producers. Specifically, the lawmakers called on Vilsack to use his authority under the Commodity Credit Corp. to find ways that would inject some additional assistance or aid to farmers.

(CC/AG)