DMC's Robust Start in 2024: Dairy Farmers Reap Benefits as Indemnity Payments Roll In
Source: The DairyNews
Dairy producers in the United States are welcoming a positive start to the year as the January Dairy Margin Coverage (DMC) income over feed costs registers at a robust $8.48/cwt.
For those who enrolled their milk at the $9.50 level, this translates to substantial indemnity payments of $761.56 for every one million pounds covered. The enrollment window for the 2024 DMC program is currently open, allowing producers to sign up until April 29.
Throughout 2023, eligible producers enrolled in the DMC program experienced consistent support, receiving indemnity payments for 11 out of the 12 months. The average monthly payout amounted to $2.80 per cwt., providing a crucial financial buffer during challenging periods.
While acknowledging the benefits of DMC coverage, Phil Plourd, president of Ever.Ag Insights, characterizes the situation as a "good news-bad news" scenario. "It's good news if you had the insurance because it helped you get through a tough year," Plourd remarks.
Katie Burgess, director of risk management with Ever.Ag, encourages producers to take advantage of the ongoing sign-up period for the USDA's DMC program, citing its strong track record in delivering payouts when margins are squeezed.
The DMC initiative empowers producers to choose a margin between milk prices and average feed costs, determining the level at which they receive assistance. Authorized under the 2018 farm bill, the program plays a crucial role in shielding producers when the difference between all-milk prices and average feed costs falls below the selected margin trigger.
Highlighting the significance of the DMC program, FSA Administrator Zach Ducheneaux notes, "Dairy Margin Coverage is a key risk management tool for dairy operations to financially endure the numerous, and often unpredictable uncertainties that adversely impact market prices for milk."
Gregg Doud, president and CEO of the National Milk Producers Federation (NMPF), urges dairy farmers to consider signing up for DMC, emphasizing its improved features from the previous farm bill, including the permanent incorporation of updated production histories. Doud stresses the critical role DMC plays for dairy farms of all sizes, particularly in the face of recent low producer margins and market volatilities.
Throughout 2023, eligible producers enrolled in the DMC program experienced consistent support, receiving indemnity payments for 11 out of the 12 months. The average monthly payout amounted to $2.80 per cwt., providing a crucial financial buffer during challenging periods.
While acknowledging the benefits of DMC coverage, Phil Plourd, president of Ever.Ag Insights, characterizes the situation as a "good news-bad news" scenario. "It's good news if you had the insurance because it helped you get through a tough year," Plourd remarks.
Katie Burgess, director of risk management with Ever.Ag, encourages producers to take advantage of the ongoing sign-up period for the USDA's DMC program, citing its strong track record in delivering payouts when margins are squeezed.
The DMC initiative empowers producers to choose a margin between milk prices and average feed costs, determining the level at which they receive assistance. Authorized under the 2018 farm bill, the program plays a crucial role in shielding producers when the difference between all-milk prices and average feed costs falls below the selected margin trigger.
Highlighting the significance of the DMC program, FSA Administrator Zach Ducheneaux notes, "Dairy Margin Coverage is a key risk management tool for dairy operations to financially endure the numerous, and often unpredictable uncertainties that adversely impact market prices for milk."
Gregg Doud, president and CEO of the National Milk Producers Federation (NMPF), urges dairy farmers to consider signing up for DMC, emphasizing its improved features from the previous farm bill, including the permanent incorporation of updated production histories. Doud stresses the critical role DMC plays for dairy farms of all sizes, particularly in the face of recent low producer margins and market volatilities.
