USDA announces first dairy safety net payment

The U.S. Department of Agriculture’s Farm Service Agency announced recently that the January 2019 income over feed cost margin was $7.99 per hundredweight, triggering the first payment for eligible dairy producers who purchase the appropriate level of coverage under the new but yet-to-be established Dairy Margin Coverage program.DMC, which replaces the Margin Protection Program for Dairy, is a voluntary risk management program for dairy producers that was authorized by the 2018 Farm Bill. DMC offers protection to dairy producers when the difference between the all milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer.Agriculture Secretary Sonny Perdue announced that sign up for DMC will open by mid-June of this year. At the time of sign up, producers who elect a DMC coverage level between $8.00 and $9.50 would be eligible for a payment for January 2019.For example, a dairy operation with an established production history of 3 million pounds (30,000 hundredweight) that elects the $9.50 coverage level for 50 percent of its production could potentially be eligible to receive $1,887.50 for January.