USDA’s Dairy Margin Coverage (DMC) program offers producers an opportunity to protect a margin over feed of up to $9.50 per hundredweight. The margin is based on national prices for milk and a dairy ration. DMC is a part of the Farm Bill and is offered through the FSA office.
Sign up deadline: January 31, 2023.
How Are Feed Costs Determined?
Feed costs are based on alfalfa, corn, and soybean meal values.
Alfalfa: last year USDA updated the alfalfa price series to premium/supreme alfalfa (formerly was the average of regular alfalfa and premium/supreme)
Corn: National Price from USDA Agricultural Price Report
Soybean Meal: Central Illinois Rail Price
There are two tiers of coverage based on production volumes
Tier 1: First 5 million pounds
Tier 2: Any additional milk
*Tier 1 offers best coverage – margins up to $9.50/cwt for just $0.15
Coverage is ideal for five million pounds per year (416,667 pounds per month) at the $9.50 level – beyond this volume, costs for coverage escalate considerably for the higher margin levels.
Producers with more than 5 million pounds per year can sign up the remainder of their milk (beyond the 5 million pounds) for the zero cost $4.00 margin.
How to Participate:
Register with FSA and have production history established
Pay the $100 administrative fee
Select a percent of milk production history to cover: 5% increments
DMC participants may also participate in the Livestock Gross Margin for Dairy and the Dairy Revenue Protection programs. We estimated the 5 million pounds per year cover milk for about 225 cows – so if your dairy is bigger than this, you may want to consider other risk management options (note upcoming seminar offered by Tiffany LaMendola to learn about available programs).