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Vilsack Discusses Dairy Margin Insurance Program And Enrollments

Rep. Welch and Sen. Leahy, left and right
WAMC/Pat Bradley

U.S. Department of Agriculture Secretary Tom Vilsack discussed a new provision of the federal farm bill when he visited Burlington last week. Enrollment for the new dairy margin insurance program begins today.

The new farm bill created a voluntary safety net program for dairy farmers — the Margin Protection Program.  It replaces the MILC, or Milk Income Loss Contract Program, and allows dairy farmers to choose coverage levels based on their production levels.

In Burlington last week, USDA Secretary Tom Vilsack described the new program.  “This program will provide catastrophic coverage if the differential between the all-milk price and general feed costs drops below $4 per hundredweight for two consecutive months. Then those who are purchasing the catastrophic coverage will receive coverage on 90 percent of their production history. The production history: current producers will have the ability to choose the highest production year from either 2011, 2012 or 2013.”

Vilsack continued with more rules including new operations, 50-50 ownership, and buy-up of coverage.
He noted that the insurance protection program is crucial to stop the boom and bust cycle of milk pricing to dairy operators. “ Prices were dropping more precipitously and were occurring more frequently. Which gave those small to mid-sized operators less time to rebound from a difficult situation. And it is about supply. So you really have to provide some kind of insurance protection, if you will, when feed costs go up or when milk prices come down significantly.  So the Dairy Margin Protection Program basically speaks to that differential between feed costs and the all-milk price.”

The USDA will provide assistance through a web-based tool that allows farmers to match the program to their needs. State extensions and FSA offices also will do outreach.
Farmers who participate must remain in the program through 2018. There is a premium of $100 each year.
Vilsack was flanked by Vermont Senator Patrick Leahy and Congressman Peter Welch, both Democrats.  Leahy, the senior member of the Senate Agriculture Committee, called the program a bargain considering potential risks. “Dairy prices are very high right now. But you only have to have about a 1 or 1-and-a-half to a 2 percent surplus and every dairy farmer knows that can go into a tailspin. I would just urge farmers, especially farmers of the size farms that are typical in Vermont, sign up for this program. It is a great investment!”

Congressman Welch called implementation of this farm bill and its dairy provision one of the fastest in recent history.  “It’s tremendous that the Department of Agriculture has done such a swift and careful job in implementing the farm bill and getting these rules out. And then secondly, I’d urge folks to pay attention to Senator Leahy’s recommendation to get signed up because then you’ll get the benefit of the protection in the Margin Insurance Program.”

Leahy said it’s crucial to have a safety net for dairy farmers. He wanted to keep the MILC program in the farm bill, but  there was strong opposition by Republican House leadership.  “I did not want a farm bill to go through that did not have some protection for dairy farmers. The ones who need the help are the typical family farms that we see here in Vermont or upstate New York and other places. Once they sign up a farm can change their coverage for future years. But they have to get in at the outset. The MILC program I like very much, but this is a good substitute for it because while milk prices are high now if history’s taught us anything that can change.”

Signup for the 2014 and 2015 program years is open until November 28th.

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