As the end of the year approaches, one journey that farmers have still to make is to the USDA Farm Service Agency (FSA) office to pick a coverage level to participate in the Dairy Margin Coverage (DMC) program in 2024. This is due to the fact that no statement has yet been made about the registration period for the next year.
Of course, dairy farmers are hoping for higher milk prices in order to get a more lucrative milk check next year. However, the forecast for first-quarter milk prices does not seem to be good, prompting farmers to switch to plan B, which is expecting DMC payments generate a significant amount in the next year, like they did in 2023.
According to the October milk marketings report, DMC indemnification payments totaled $1.27 billion in the first ten months of 2023, average $74,453 per dairy company. The 2023 DMC program registered around 17,059 dairy businesses, accounting for approximately 74.5% of enterprises with documented production history. All indemnification payments made in 2023 are subject to a 5.7% sequestration reduction.
Ever.Ag’s director of risk management, Katie Burgess, encourages growers to continue to participate in the USDA’s DMC program in the future.
“It has a strong track record of generating producer payouts when margins get squeezed,” she said earlier this month at the World Dairy Expo in Madison, Wis.
DMC enables farmers to choose a margin between the milk price and the average feed cost to decide the degree of help they get.
The DMC program was established by the 2018 farm bill to provide farmers with protection when the gap between the all-milk price and the average feed price falls below the producer-selected margin trigger.
According to FSA Administrator Zach Ducheneaux, Dairy Margin Coverage is a critical risk management tool for dairy farms to financially withstand the various and sometimes unanticipated factors that negatively effect milk market pricing.
According to Sarina Sharp of the Daily Dairy Report, the dairy safety net has helped to absorb some—but not all—of the losses on dairy farm financial sheets.
The current Farm Bill was extended for one year until September 30, 2024, by a continuing resolution approved and signed into law earlier this year. This means that the present farm bill scheme will be extended until 2024. DMC programs will continue to operate for at least another year. However, for the time being, producers are waiting for the announcement of 2024 DMC sign-ups. Stay tuned to dairyherd.com for DMC program updates.
