Getting dairy’s safety net right

The 2014 farm bill repealed a number of existing dairy safety net programs and replaced them with two new programs: Margin Protection Program for Dairy Producers and a Dairy Product Donation Program.

The Dairy Margin Protection Program (MPP) is a voluntary program that makes payments when the national average income-over-feed-cost margin index falls below a farmer-selected coverage level. Different coverage options reflect a dairy farmer’s ability to protect different margin levels. Dairy producers pay premiums for coverage and must take an active role in selecting their coverage options each year, similar to crop insurance.

Most dairy producers are not satisfied with the safety net provided by the MPP. While this program is more of an insurance product instead of a target price program, several policy issues remain and warrant further examination as discussions about the 2018 farm bill gain momentum.

Questions to consider:

1. Should changes be made to the MPP? If yes, should the average feed cost calculation move to a regional or state level?

2. Should the feed cost formula be increased? Should MPP premium rates be adjusted? Should MPP offer more coverage options?

3. Should MPP be eliminated and replaced with a new program?