New program included in 2014 farm bill

WASHINGTON -- Dairy farmers can start signing up for the new dairy Margin Protection Program for 2014 and 2015 on Sept. 2, Agriculture Secretary Tom Vilsack announced Aug. 28.

WASHINGTON -- Dairy farmers can start signing up for the new dairy Margin Protection Program for 2014 and 2015 on Sept. 2, Agriculture Secretary Tom Vilsack announced Aug. 28.

Enrollment ends on Nov. 28.

In a telephone news conference from Vermont, Vilsack thanked Sen. Patrick Leahy, D-Vt., and Rep. Peter Welch, D-Vt., who were included on the call, and House Agriculture Committee ranking member Collin Peterson, D-Minn., for their role in passing the 2014 farm bill including MPP.

"The Margin Protection Program is significant reform, creating a strong safety net that will help dairy farmers better manage risk," Peterson said in a news release. "Reforming dairy programs was a top farm bill priority for me, and I'm pleased to see the USDA (U.S. Department of Agriculture) moving ahead with implementation. Dairy farmers should visit the website and their local FSA (Farm Service Agency) offices to learn more and enroll in the new program."

The new program provides financial assistance to participating farmers when the margin -- the difference between the price of milk and feed costs -- falls below the coverage level selected by the farmer. The rule was scheduled to be published in the Federal Register on Aug. 29 and has a 60-day public comment period.


Participating farmers must remain in the program through 2018 and pay a minimum $100 administrative fee each year. Producers have the option of selecting a different coverage level during open enrollment each year.

Vilsack noted that dairy prices are high now, but urged farmers to sign up anyway.

Leahy noted that he liked the old Milk Income Loss Contract Program but said he considers the dairy protection program to be "a good substitute" for it.

"Sign up for this program," Leahy said to dairy farmers on the call. "For $100 this is a great investment. This is a chance to stop the boom or bust situation. The incentive is for sensible production."

Price tailspin

Leahy noted that a 1 or 1.5 percent milk surplus can cause prices "to go into a tailspin."

He also said the program contains protection against overproduction because farmers must start out getting coverage on their last three years of production. Future year increases will not be covered if they exceed the national average, Leahy said.

The program was written to avoid speculators coming into dairy, increasing production and then getting the government to bail them out if prices go down, Leahy said.


Farmers can also opt to increase their coverage, and Welch noted that smaller farmers will get an extra incentive because premiums will be lower on the first 4 million pounds of production.

USDA will continue promoting dairy consumption in the U.S. and overseas, Vilsack said, noting there are "6 million new, middle-class consumers coming on line in the next decade."

But he also said USDA is simultaneously implementing the Dairy Product Donation Program, which authorizes USDA to purchase and donate dairy products to nonprofit organizations that provide nutrition assistance to low-income families if prices are low.

The National Milk Producers Federation praised the program and USDA's quick implementation of it.

"The new Margin Protection Program is more flexible, comprehensive and equitable than any safety net program dairy farmers have had in the past," NMPF President and CEO Jim Mulhern said. "It is risk management for the 21st century, and we strongly encourage farmers to invest in using it going forward."

Premiums must be paid either in full at signup or 25 percent by Feb. 1, with the remaining 75 percent balance to be paid by June 1. NMPF noted in its release that it had urged USDA to provide greater flexibility on the producer premium payment, such as through milk check deductions.

"While USDA advised us they did not have time to set up such a system for the initial launch of MPP, we will continue to work with the department in an effort to modify this feature for future years," Mulhern said.

USDA has released a tool for signup (visit ), and NMPF ( ) also released a document explaining the details of how the program works.


National Farmers Union President Roger Johnson also praised USDA for a "timely rollout" of the program and said the Dairy Product Donation Program is a "wonderful example of smart public policy, since it allows USDA to help stabilize the milk market while also helping those facing food insecurity."

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