Geoff Vanden Heuvel
Director of Regulatory and Economic Affairs
USDA announced some improvements in the Dairy Margin Coverage (DMC) program, which is the dairy safety net program that provides excellent risk management coverage on the first five million pounds of each dairy’s annual production. The biggest improvement is to the alfalfa hay component of the feed cost calculation, which will now be 100% based on the price for premium hay as opposed to using a 50/50 blend of premium prices and average quality hay.
Calculations published by Dave Natzke in Progressive Dairy estimate that this change in the hay calculation would have increased the hay cost factor in the DMC feed calculation by $14.50 per ton in 2020 and $15.60 per ton in the first 10 months of 2021. USDA is going to issue supplemental payments for 2020 and 2021 based on these higher alfalfa cost numbers to those enrolled in the DMC. If you signed up for the $9.50 margin coverage for the full 5 million pounds eligible, this supplemental payment could be in the $12,000-plus range. This demonstrates once again that the DMC program is the gift that keeps on giving. While it can be irritating that it is only available on the first five million pounds you produce, you definitely do not want to miss these benefits by failing to sign up. DMC signups for 2022 start on Monday, December 13 and run through February 18, 2022 at your local USDA-FSA office.