The 2018 Farm Bill extension, announced in mid-November as part of a congressional spending agreement, was intended to mean “business as usual for 2024” when it comes to USDA farm programs, according to Farm Service Agency Administrator Zach Ducheneaux.
Unfortunately, a stipulation within the farm bill extension specific to the Dairy Margin Coverage (DMC) program for 2024 will require an extended rule-making process, including 30 to 60 days for posting the regulatory change to the Federal Register.
That means dairy producers will likely be waiting well into next year for 2024 DMC enrollment, even as 2023 coverage quickly approaches expiration at year-end.
In an email to American Farm Bureau Federation Economist Daniel Munch, a USDA official shared that he still could not provide a specific date for 2024 DMC Enrollment.
“What I can tell you is that in the one-year extension language of the 2018 Farm Bill it requires USDA to combine the production history from DMC with the production history from Supplemental DMC, which requires two things; 1) a regulatory change that must be published in the Federal Register before we can hold sign up and 2) software updates,” the USDA official wrote.
“The best thing I can share with you now is that there will be a 2024 DMC sign up, but until we get those two things in place, sign up for 2024 is on hold. We are working as quickly as possible to get those items in place.”
The DMC voluntary risk-management program administered by USDA’s Farm Service Agency (FSA) offers protection to dairy producers when the difference between the all-milk price and the average feed price (the margin) falls below a certain dollar amount selected by the producer.
Despite the enrollment delay, Farm Bureau Insurance of Michigan Farm and Agribusiness Sales Director Kevin Robson said DMC still merits consideration given the latest USDA World Agricultural Supply and Demand Estimates (WASDE) prediction of the all-milk price for 2023 at $20.60, down $4.74 compared to 2022, and the 2024 all-milk price projection of $20.25 per cwt.
“Looking to 2024, the balancing act of feed costs versus projected milk prices will make risk management absolutely essential,” Robson said. “DMC provides a solid foundation in managing that risk, complemented by crop insurance products, including Dairy Revenue Protection.”
Similarly, AFBF’s Munch strongly recommends producers consider 2024 DMC enrollment, considering it to be “a risk management no-brainer.”
“In the 58 months that FSA has tracked margins since DMC’s 2019 debut, farmers with the highest $9.50 coverage option have received payments 35 of those 58 months or 60% of the time,” Munch said.
“In 2023, we saw the lowest DMC margins on record when June and July surpassed the program’s ‘catastrophic’ $4 margin for the first and second time,” he added, noting catastrophic coverage is a premium-free program option.
“That means there is almost no risk to the producer for enrolling besides a $100 administrative fee.”
According to USDA’s Dec. 4, DMC 2023 enrollment report, out of Michigan’s 979 eligible dairy operations with established production history, only 640 were enrolled, representing a 65.4% enrollment level compared to a national enrollment rate of 74.5%
On a production basis, roughly 69% of the state’s eligible production was covered compared to a nationwide average of 77.1%.
With the milk price outlook for 2024 “very much up in the air,” Munch said DMC has been the difference between staying afloat and closure for many dairy farms over the past several years.
Estimated 2023 DMC payments for Michigan producers totaled more than $57 million for an average per farm payment of $89,180, compared to a national average per farm payment of $74,453.
Nationwide, dairy producers received more than $1.27 billion in economic support for 2023 and margin forecasts indicate the likelihood of more to come before the end of the calendar year.
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