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Dairy Management Workshops get farmers updated

By Lisa Young
lyoung@agrinews.com

Date Modified: 02/24/2014 11:21 PM

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ROCHESTER, Minn. — Dairy producers got to hear updates on the new farm bill, successful management habits and milk quality considerations during a pair of workshops.

The Minnesota Milk Producers Association hosted Dairy Management Workshops Feb. 5 in Rochester and Feb. 7 in Freeport.

Marin Bozic, dairy economist for the University of Minnesota, walked through the implications the new farm bill has for dairy producers.

In short, three programs are going away and two new programs are being implemented that are specific to dairy. The Milk Income Loss Contract Program and Dairy Product Price Support Program will be replaced by the Margin Protection Program for Dairy Producers.

Also on the way out is the Dairy Export Incentive Program. The other new program introduced in the 2014 farm bill is called the Dairy Product Donation Program.

In contrast to the MILC program, which was free protection for dairy producers, they will pay up front for the protections MPP offers.

"Risk management is going to be more important," Bozic said. "(MPP) is a very simple insurance-like contract with a one size fits all income over feed costs margin."

A benefit of the approach for those who grow their own feed is that the formula for determining the income over feed costs margin assumes producers buy all their feed, Bozic said.

Producers will be able to insure 25 percent to 90 percent of their production history, which is the highest of their milk marketings from 2011-13. They also will be able to choose what dollar level of potential payout they would like for the amount of production they selected.

Looking at how pricing has fluctuated during the past several years, potential payout at $4 won't help much, Bozic said, but $8 would no longer be just catastrophic protection.

"$6.50 would help fill most gaps," Bozic said.

Through 2015, MPP premiums will be discounted. Starting in 2016, the first 4 million pounds producers generate per year will have one premium (which will vary depending on the rate of coverage producers choose), and a slightly higher premium will be attached to all production beyond 4 million pounds. There is no cap on how much milk production the program can cover.

One hurdle for producers looking to expand slowly is that incremental growth will not be covered under MPP. However, producers who add an entirely new site — at a new physical location with its own parlor, manure management system and the like — will be able to obtain coverage through MPP. Any changes to that provision will likely have to wait until the 2018 farm bill, Bozic said.

"There are a lot of questions," Bozic said. " I don't have all the answers for you now. But this is a program you should strongly consider. It's too sweet of a deal to skip."

The Dairy Product Donation Program will only be implemented when the income over feed costs margin goes below $4 per hundredweight in each of two successive months. At that point, the secretary of agriculture must purchase dairy products at market prices and distribute them immediately to food banks or other programs that provide food assistance to individuals in low-income groups.