A sizable Dairy Margin Coverage (DMC) payout is on its way to producers, as projected. In fact, the DMC revenue over feed cost computation in June established a new low of $3.65/cwt. Milk insured at the $9.50 level will get a $4,366.09 indemnity payment for each million pounds enrolled. This is a $1.18/cwt decrease from the previous record low in May.
Premium alfalfa hay dropped $7 per ton to $310, while maize decreased $0.05 per bushel to $6.49. Soybean meal fell $10.12 per ton to $413.46, bringing feed prices down $0.22 to $14.25/cwt.
The margin over feed cost is $1.18/cwt lower than the previous record low in May. This is the lowest milk revenue margin level since the DMC program and its predecessor, the Margin Protection Program for Dairy (MPP-Dairy), were established. Payments to date amount $16,780 per million pounds insured at the highest level.
According to Phil Plourd, president of Ever.ag Insights, farmers can also use risk management systems such as Dairy Revenue Protection (DRP).
“These are the kinds of times that remind us that risk management necessitates vigilance and diligence.” I doubt many people expected margins to be this low in 2023. “However, here we are,” he adds.
The DMC program was established by the 2018 farm bill to provide farmers with protection when the gap between the all-milk price and the average feed price falls below the producer-selected margin trigger.
According to Jim Mulhern, CEO of NMPF, DMC’s catastrophic coverage level is at the top of his team’s farm bill wish list.
“The basic DMC’s catastrophic coverage level includes up to 5 million pounds of annual protection, which is equivalent to a 200 to 220 cow herd.” “We’re looking at DMC’s tier 2 adjustments—anything above basic—because those markets collapsing would be more akin to a truly ‘catastrophic’ event,” Mulhern explains.
