Finance: USDA extends Dairy Margin Coverage deadline, payments to August 2023 ‘likely’

By Teodora Lyubomirova

- Last updated on GMT


Related tags Agriculture Dairy farming Food security Milk Finance

Small and mid-sized farmers will have additional time to enrol into the voluntary program, which offers financial support when market volatility seriously impacts milk prices.

The USDA’s Farm Service Agency (FSA) has extended the period in which farmers can register for the 2023 Dairy Margin Coverage (DMC) program. The previous deadline was December 9, 2022 and the new one is January 31, 2023.

The extension also brings a longer coverage period for the 2023 program, stretching to the end of next month.

The DMC, a voluntary risk management program in which small and mid-sized dairies can enrol, offers a safety net to dairy producers when the average feed price drops below a certain amount selected by the producer. This ranges from US$4 to US$9.50 for Tier 1 and from US$4 to US $8 for Tier 2 and is calculated monthly.

FSA administrator Zach Ducheneaux predicted DMC payments are likely to trigger for the first eight months in 2023 and urged farmers to sign up on time.

He said: “We recognize this is a busy time of year with many competing priorities, so we’ve extended the DMC enrolment deadline to ensure every producer who wants coverage for 2023 has the opportunity to enrol in the program. Early projections indicate DMC payments are likely to trigger for the first eight months in 2023. We all know that markets fluctuate, sometimes at a moment’s notice and sometimes with no warning at all, so now’s the time to ensure your operation is covered. Please don’t let this second chance slide.”

FSA reports that more than 19,000 farms enrolled into the program in 2021, receiving more than US$1.1bn, or US$62,000 on average. In 2022, nearly 18,000 operations that enrolled in DMC for 2022 received margin payments for August and September for a total of US$76.3m.

The Supplemental DMC, which was introduced in 2021 and provided US$42.8m in payments, will also be available for 2023. Producers with less than five million pounds of established production history may enrol supplementary pounds. Those who didn't enrol before can do so now, and should first enrol in the Supplemental DMC before enrolling in the main 2023 DMC. Producers need to provide their 2019 actual milk marketing, which FSA uses to determine established production history.

Meanwhile, dairies who enrolled for the 2022 Supplemental DMC will see their supplemental coverage automatically added to the 2023 DMC contract.

NMPF welcomes extension

The National Milk Producers Federation president Jim Mulhern welcomed the deadline and coverage extension, adding that it’s ‘imperative’ for dairies to review their options. “Farmers…should use this extended DMC signup period to consider USDA’s full suite of risk-management options, all supported by NMPF,”​ he said.

“While DMC is designed to promote stable revenues and protect against financial catastrophe for small and medium-sized producers, other options including the Dairy Revenue Protection program and the Livestock Gross Margin for Dairy Producers program, both of which were revamped in the 2018 Farm Bill at NMPF’s urging, provide important and effective risk management.

“Finally, producers should keep in mind that USDA is developing a separate milk loss program that was provided for in legislation enacted last year. The program reimburses dairy producers of all sizes for milk dumped on account of disasters that occurred in 2020 and 2021. NMPF is working with USDA as it develops the initiative.”

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