The Math of MPP

The Math of MPP

Dairy Cows Dairy Cows

August 24, 2016

NASHVILLE, Tenn (RFD-TV) The Dairy Margin Protection Program made its largest payout last month. However, many farmers are asking how effective the program is, after suffering through the lowest milk prices since 2009. 

Experts say farmers should think of the program as “insurance,” hoping it doesn't have to pay, rather than a farm subsidy. But when experts analyzed potential payments for a farm with a 2 million pound production history it found that only the $6.50, $7.50, and $8.00 coverage levels provided farmers with a net gain. 
Another part of the problem is enrollment. Of the 25,000 enrolled in 2016, more than 19,000 are covered at the $4.00 level, which has received no payments to date.  Fewer than 3,000 farms are covered at price levels that actually showed a net gain for 2016.

A Stanislaus County, California producer, Pete Verburg, gives his take on the recent pitfalls in the industry: "The dairy business has been a tough business for the last year. The industry has seen a terrible decline in the milk price for over a year now, and we're not looking forward to a better price within this year. Next year, maybe, it'll look better. But right now, it doesn't look good. The average dairyman is losing money every month on every cow that is milking."
When it comes to the MPP, the National Milk Producers Federation recently published a tool that helps farmers decide what coverage level works best for their farm. 

The deadline for enrollment in the Margin Protection Plan is September 30th.

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