For the most part, MPP’s premiums have exceeded the payouts, leaving producers with almost no net receipts (see chart below). For the larger producer, the risk/reward ratio is not there, due to excessive premiums. Smaller producers had a chance to get net payments because premiums were not as excessive, but still only received $.025/cwt. Premiums for smaller producers ranged from $.09 for the $6.50 to $.48 for the $8.00/cwt coverage. Larger producer’s premiums were $.25 to $1.25/cwt.
LGM-Dairy performed well in January to June with nice payouts, primarily due to lower milk prices. The last six months of the year had high enough margins to provide no indemnities. Average net returns for LGM-Dairy were $.59/cwt in 2016 (see chart below). Premiums averaged $.23/cwt for 2016.
Source: Agweb
Link: http://www.agweb.com/blog/dairy-gross-margin/mpp-and-lgm-dairy-performance-for-2016/