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Farm Bureau explores possible Dairy Margin Coverage adjustments

Economist Danny Munch says the American Farm Bureau Federation is looking at ways to improve the federal safety net programs like the Dairy Margin Coverage program. “Particularly last year, feed costs were low, but other costs, veterinary costs, labor costs, other non-feed costs, farmers are seeing them get higher and higher each year, and you’re also seeing regional differences in the feed cost side of things, as well.”

Munch says DMC is basically an all-milk price-over-feed margin-triggered program that could be updated to account for more expenses.  He says adding indices for other costs and regional differences gets complicated, so Farm Bureau instead evaluated expanding the range of DMC protection from $9.50 up to $12.00 per hundredweight. “What we found was that for each increase that you go up, more months would have triggered for farmers because you have that extra level of protection. It’s basically just a simplified way of adding more coverage by expanding the margin that could be protected versus adding more costs that can be covered.”

Munch says the existing Dairy Margin Coverage options covered about three-quarters of production expenses in 2022 for a herd of fewer than 499 cows.  He says if DMC allowed $12.00 per hundredweight coverage, it would still cover only about 80% of the expenses. 

Munch says Farm Bureau’s research does not show what the potential premium costs would be if DMC allowed coverage higher than $9.50 under Tier 1.