The last day for dairy farmers to enroll in the Dairy Margin Coverage (DMC) for 2022 with your local Farm Service Agency (FSA) office is Feb. 18, 2022. Dairy farmers who signed up for the five-year commitment last year and locked in their coverage still need to pay the $100 administrative fee to stay enrolled in the program.
Dairy farmers can also sign up for Supplemental DMC if they have less than 5 million pounds of established production. These dairy farms can update their production to their 2019 actual production. This update in pounds is retroactive to January 2021 and will go through 2023. Dairy farmers may receive a DMC payment for all 2021 months of increased production with Supplemental DMC. The USDA has also updated the feed cost calculation from a 50 percent premium hay ration to a 100 percent premium hay ration for DMC.
Depending on farm size and coverage level, your farm could have up to 95 percent of your annual historic protection with DMC. With many farms selecting Tier 1 (up to 5,000,000 annual pounds) coverage at the $9.50/cwt margin, the DMC program can be an effective talking point when discussing next year’s cash flows and how risk management tools can reduce the financial impact of unexpected milk prices or feed costs. The Programs on Dairy Markets and Policy’s (DMaP) Dairy Margin Coverage Tool enables you to create producer-specific graphs showing your coverage level and projected monthly price triggers. Additionally, when discussing your 2022 cash flow sensitivity, it is also important to consider your participation in other risk management programs through your crop insurance agent, such Dairy Revenue Protection (DRP) or Livestock Gross Margin for Dairy Cattle Insurance (LGM-Dairy).
Questions related to Dairy Margin Coverage can be directed to Extension educators Nathan Hulinsky at huli0013@umn.edu or Megan Roberts
at meganr@umn.edu.
