U.S. Dairy Producers Navigate Changing Dairy Margin Coverage (DMC) Landscape

An improved milk-feed income margin for U.S. dairy producers in September resulted in a rise in the DMC milk income over feed cost margin to $8.44 per hundredweight (cwt). This increase limited indemnity payments to dairy operations enrolled in DMC at Tier I insured levels of $8.50 and above. Consequently, September DMC payments totaled approximately $35 million, marking the smallest monthly total for 2023.

For the first nine months of 2023, DMC indemnity payments disbursed through the USDA's Farm Service Agency (FSA) reached $1.27 billion. The average payment per dairy operation enrolled in the 2023 DMC program during this period was $74,553. Early November enrollment data indicates that 17,041 dairy operations, representing about 74% of operations with established production history, are enrolled in the 2023 DMC program. The annual milk volume covered under the program totals 155.4 billion pounds, accounting for approximately 77% of production history established in 2023.

In terms of DMC indemnity payments by state through early November, Wisconsin led with a total of $272.2 million, averaging $63,633 per enrolled operation. The following states also reported total payments and average payment per dairy operation: California - $140 million and $148,739, New York - $117.1 million and $64,709, Minnesota - $102.4 million and $59,796, and Pennsylvania - $99.4 million and $56,110.

As the DMC landscape evolves, U.S. dairy producers continue to navigate the changing conditions and rely on the safety net provided by the program to mitigate financial challenges in the dairy industry.