That’s the advice from Extension Service dairy market specialist Brian Gould in the wake of the 2018 Margin Protection Program (MPP) approved by Congress earlier this year. Based on what’s already known, all those dairy farmers should sign up for the maximum $8 margin protection per 100 pounds of milk, he indicates.
While speaking at the Extension Service’s semi-annual farm management update, Gould described the legislation which was passed on February 9 as “a gift” for dairy farmers, particularly for those with a history of annual milk production of up to 5 million pounds (the approximate equivalent of 200 cows with an annual milk production average of 22,000 pounds).
Gould pointed out that for those dairy farmers the already known MPP payments for February and March alone will significantly exceed the premium costs for all months in 2018 at the $8 per hundred of milk margin for income over feed costs (IOFC) in the payment formula. The premiums are not due until September 1 but a federal budget reconciliation sequester of about 6.6 percent will be deducted from the MPP payments, he added.
The known payment numbers for February and March respectively are approximately $1.12 and $1.23 per hundred at the maximum $8 IOFC. Based on the most recent Class III milk futures prices, payments for April (possibly over $1), May, and June are also likely, Gould observed.
Dairy farmers with an annual milk production of more than 5 million pounds are also eligible for the new MPP but they have less of a guarantee of a return. For them, the special one-year MPP program has premiums starting at 2 cents per hundred for a protected margin of $4.50 per hundred and rising to $1.36 per hundred for the $8 protection. For those under 5 million pounds of milk, the premiums start at a $5.50 margin and rise to only 14.2 cents per hundred at the $8 level of protection.
Gould and fellow dairy economist Mark Stephenson have been making presentations at meetings around the state to acquaint dairy farmers with the opportunity they’ve been given. Before visiting their county FSA office, dairy farmers can also obtain additional information online at https://DairyMarkets.org/MPPvideo and https://dairymarkets.org/MPP/Tool.
By: Ray Mueller
Source: Wisconsin State Farmer
Link: https://www.wisfarmer.com/story/news/2018/05/06/dairy-farmers-urged-accept-mpp-gift/585259002/