NSDA Welcomes Much-Needed Improvements to Dairy Safety Net

NSDA Welcomes Much-Needed Improvements to Dairy Safety Net

After months of challenging negotiations on Capitol Hill, President Donald Trump signed into law a budget deal in early February that includes provisions that will reform the dairy safety net into a more effective resource for farmers facing 2018’s challenging milk price environment. NSDA is optimistic these changes will benefit the state’s dairy farmer community.

The Bipartisan Budget Act of 2018 (H.R. 1892) sets federal spending levels for the next two years, but most critical to the dairy community, it contains policy changes affecting the Margin Protection Program (MPP) and other dairy risk management programs within the Agriculture Department (USDA). The Nebraska State Dairy Association (NSDA) will continue to update its members as further details and changes are implemented.

These changes will help provide more financial resources for the federal dairy program heading into the 2018 Farm Bill, and will increase the prospects of timely and productive final legislation.

“The reforms enacted in this package will ensure that MPP provides more effective coverage for producers of all sizes, while also expanding the availability of meaningful risk management options, similar to the crop insurance options enjoyed by producers of those commodities,” said Bill Thiele, president of Nebraska State Dairy Association.

Specifically, the dairy package will:

  • Adjust the first tier of covered production to include each farm’s first 5 million pounds of annual milk production (about 217 cows) instead of 4 million pounds, a recognition of the growth in herd sizes across the country.
  • Raise the catastrophic coverage level from $4.00 to $5.00 for the first tier (5 million pounds) of covered production for ALL dairy farmers.
  • Reduce the premium rates for every producer’s first 5 million pounds of production, to better enable dairy farmers to afford the higher levels of coverage that will provide more meaningful protection against low margins.  No changes were made to the second tier of premiums. Below is a comparison of the old and new rates for the first tier:
    Margin Original Rate New Rate
    $4.50 0.010
    $5.00 0.025
    $5.50 0.040 0.009
    $6.00 0.055 0.016
    $6.50 0.090 0.040
    $7.00 0.217 0.063
    $7.50 0.300 0.087
    $8.00 0.475 0.142
  • Modify the margin calculation to a monthly (from bi-monthly) basis to make the program more accurate and responsive to producers in difficult months.
  • Waive the annual $100 administrative fees for “underserved” farmers, defined as those who meet certain criteria defined by the Agriculture Secretary, including limited resource, beginning, veteran or socially disadvantaged farmers.
  • Direct USDA to immediately reopen the program signup for 2018.
  • Remove the $20 million annual cap on all livestock insurance, including the Livestock Gross Margin-Dairy program.  This will allow USDA to develop and/or approve additional risk management tools for dairy producers that can complement MPP-Dairy.

NSDA was engaged with the National Milk Producers Federation as it worked closely with allies in Congress to secure these improvements to the MPP, as well as expanded access to risk management tools for dairy producers. Because of the budget challenges presented by the upcoming Farm Bill, a supplemental spending bill containing disaster assistance funding was a unique opportunity to enact these much-needed changes.

“We will work with USDA, NMPF and other organizations to provide information to farmers about the changes in the new law,” said Thiele.  He added that this legislative effort now puts the dairy farmer community “in a much better position as discussions over the 2018 Farm Bill kick into high gear.”

These improvements come at a critical time for the dairy community, as milk prices continue to fall and economic forecasts suggest a challenging milk price environment during the first half of 2018.