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MPP updates improve safety net program for US dairy farmers before Farm Bill expires

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Mary Ellen Shoup

By Mary Ellen Shoup+

24-Jul-2017
Last updated on 25-Jul-2017 at 09:41 GMT2017-07-25T09:41:07Z

The updates to MPP aim to provide US dairy farmers with better production against milk production losses. ©iStock/Hillview1
The updates to MPP aim to provide US dairy farmers with better production against milk production losses. ©iStock/Hillview1

The Senate Appropriations Committee has passed legislation that makes significant updates to the Margin Protection Program for dairy farmers (MPP-Dairy).

The legislation includes improvements that will lead to lower costs for dairy farmers and better insurance coverage when milk margins are low.

Rather than waiting for the Farm Bill to expire in the fall of next year, the USDA can implement these changes for part of the 2018 calendar year, the Senate Appropriations Committee said.

The Farm Bill expires in the fall 2018 and it is unlikely that the USDA would be able to implement the MPP-Dairy changes until 2020 if dairy farmers have to wait another year, according to the committee.

“Farmers in America’s Dairyland should not be left waiting for action from Washington and this bipartisan legislation takes important steps by making significant changes to the dairy margin program to better support the folks who drive our agricultural economy and rural communities forward,” Wisconsin Senator Tammy Baldwin said.   

The Farm Bill has been criticized by the US dairy industry for its budget cuts and leaving farmers without an adequate risk management protection.

“The enhancements to the dairy Margin Protection Program contained in the bill would strengthen the program and help pave the way for additional necessary improvements in the upcoming farm bill,” NMPF president and CEO, Jim Mulhern said.

Changes to MPP-Dairy

Among the changes will be moving MPP calculations and payments from a bimonthly basis to a monthly basis to improve the program’s accuracy and timeliness in responding to market conditions. Premium costs will also be “dramatically” reduced to encourage dairy producers to participate in higher coverage levels.

The Tier 1 threshold level corresponding to lower premium costs will be adjusted from the current level of 4m lbs of production (equivalent of 185 cows) to 5m lbs to better align with the median US dairy farm size of 223 cows and incentivize farms to participate in more meaningful levels of protection.

“By making the dairy safety net program more affordable this legislation will ensure that more farmers have access to better protection against catastrophic losses, likes those we experienced in 2009 and 2012,” Mulhern said.

“While there is more work to do to make the MPP the effective safety net that it was envisioned to be, these improvements are a great start.”

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