The continued milk price rollercoaster, which seems to be heading lower, has required a Dairy Margin Coverage (DMC) payment to be given in 2023. According to the USDA’s Agricultural Prices report, which was issued late Wednesday afternoon, the April Dairy Margin Coverage revenue over feed costs was $5.84/cwt. Producers having coverage at $9.50/cwt will get $2,735.38 in indemnity payments for each million pounds enrolled.
In comparison to March, the all-milk price decreased $0.40/cwt. to $20.70, maize increased $0.03/bu. to $6.70, premium alfalfa hay climbed $1.00/ton to $315, and soybean meal decreased $27.15/ton to $457.25.
To far, the $9.50 coverage has paid $8,926.53 for each million pounds in exchange for a $1,500 premium. Payments for the highest level of coverage are expected to continue until October, according to the Farm Service Agency.
The DMC programme 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 Jim Mulhern, CEO of NMPF, DMC’s catastrophic coverage level is at the top of his team’s farm bill wish list.
“The basic DMC’s catastrophic coverage level includes up to 5 million pounds of annual protection, which is equivalent to a 200 to 220 cow herd.” “We’re looking at DMC’s tier 2—anything above basic—adjustments because the collapse of those markets would be more akin to a truly ‘catastrophic’ event,” Mulhern explains.
According to Phil Plourd, president of Ever.ag Insights, periods like these make farmers appreciate programmes like DMC as well as coverage options like Dairy Revenue Protection (DRP).
“These are also times when we are reminded that risk management necessitates vigilance and diligence.” I doubt many people expected margins to be this low in 2023. “However, here we are,” he adds. “Producers who take a disciplined approach to market monitoring and action may not come out on top in this environment, but they are almost certainly doing better.” When will it be over? Prices are clearly low enough to inhibit production, which we anticipate in the coming months. However, there are several shifting variables in the market equation, both domestically and abroad.”
