Legislators in the US Congress are beginning a process to review the current US Farm Bill which concludes in 2018. The US dairy sector is seeking an overhaul of the Margin Protection Programme (MPP) due to dwindling participation. The MPP allows US dairy farmers to insure a margin between milk prices and feed costs. The National Milk Producers Federation (NMPF) has acknowledged that MPP is failing to live up to its intended role as a viable economic safety net against volatility. However, NMPF believe that the concept of MPP is right one and should be tweaked rather than scraped. The decline in participation according to NMPF is due to a flaw in the modelling used in the MPP which underestimates feed costs. In 2015, the MPP’s first full year, 56% of dairy farmers elected to pay premiums to purchase coverage above the basic $4 margin level. Margin protection at the basic level of $4 is available for an administrate charge of $100. In 2017, only 8% of farms, producing just 2% of the milk supply in the US are paying premiums for enhanced coverage.
Agri Food Policy Executive
28 May 2021