By Tiffany LaMendola, Ever.Ag

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

The Basics:

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).

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