Congress Asks USDA to Implement Dairy Insurance Program04/02/2019
U.S. Senators Debbie Stabenow (D-Mich.), Ranking Member of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, and Roy Blunt (R-Mo.) led a bipartisan letter urging Agriculture Secretary Sonny Perdue to prioritize the implementation of the dairy provisions in the 2018 Farm Bill. Perdue has said enrollment will begin mid-June.
As dairy farmers across the country continue to struggle from market instability, the 2018 Farm Bill dramatically expands support for dairy producers, providing flexible, affordable coverage options through the Dairy Margin Coverage program. Early analysis has shown that the improvements would provide much-needed financial support to dairy farmers – providing significant benefits for all operations and up to 5 times as much support for the smallest farms.
“The situation for dairy farmers is urgent,” the Senators wrote. “Although Dairy Margin Coverage is effective as of January 1, 2019, the government shutdown delayed action on 2018 Farm Bill implementation for over a month. During this time, dairy farmers have continued to face market instability and are struggling to survive the fourth year of sustained low prices.”
“The changes to the Dairy Margin Coverage program make it a much more flexible policy that will likely benefit many of the farmers who chose not to participate in the Margin Protection Program. The USDA should strongly encourage these farmers to consider the Dairy Margin Coverage program,” wrote the Senators.
“In the interim, we request that the USDA invest in outreach, training, coordination with partner organizations, and staffing to ensure that every eligible farmer receives personalized information about the new and improved options,” wrote the Senators.
The 2018 Farm Bill also made several other important changes to address the needs of dairy producers, including: a study on the feed components of the margin calculation, a provision to counteract the disincentive for milk donation, continuation of forward contracting, an update to the Class I pricing formula, and a partial refund or credits from premiums paid under the former Margin Protection Program.
The letter, led by Senators Stabenow and Blunt, was also signed by Sens. Patrick Leahy (D-Vt.), Mike Crapo (R-Idaho), Dianne Feinstein (D-Calif.), Jerry Moran (R-Kan.), Christopher Murphy (D-Conn.), James E. Risch (R-Idaho), Patty Murray (D-Wash.), M. Michael Rounds (R-S.D.), Robert P. Casey, Jr. (D-Pa.), Susan M. Collins (R-Maine), Richard Blumenthal (D-Conn.), John Thune (R-S.D.), Chris Van Hollen (D-Md.), Charles E. Grassley (R-Iowa), Bernie Sanders (I-Vt.), Cory Gardner (R-Colo.), Amy Klobuchar (D-Minn.), Tina Smith (D-Minn.), Tammy Baldwin (D-Wis.), Sherrod Brown (D-Ohio), Angus S. King, Jr. (I-Maine), Kyrsten Sinema (D-Ariz.), Jeanne Shaheen (D-N.H.), Gary C. Peters (D-Mich.), Charles E. Schumer (D-N.Y.), Margaret Hassan (D-N.H.), Jeffrey A. Merkley (D-Ore.), Thomas R. Carper (D-Del.), Christopher A. Coons (D-Del.), Ron Wyden (D-Ore.), Joni K. Ernst (R-Iowa), Elizabeth Warren (D-Mass.), Josh Hawley (R-Mo.), Kirsten E. Gillibrand (D-N.Y.), Michael F. Bennet (D-Colo.), and Maria Cantwell (D-Wash.).
The dairy sector is entering a fifth year of low milk prices. Global oversupply and Trump’s trade wars are weighing on producers, and Chapter 12 farm bankruptcies are on the rise in major dairy regions.
Rescue effort: The farm bill overhauled a previous dairy insurance program and effectively made it cheaper for smaller farms to buy policies that are more likely to trigger payments when the margin between milk prices and feed costs dips below a certain level.
Under the new system, USDA’s Economic Research Service estimates that the government will send about $600 million to milk producers in 2019 – three times more than the previous Margin Protection Program paid out over three years.
The farm bill also included other dairy incentives. While plenty of dairy farmers are likely to take advantage of the programs, some say it will be just enough to tide them over for another year without addressing broader industry woes.
In dairy states like Wisconsin and Vermont, analysts have recommended tax breaks, research investments, a two-tiered milk pricing system and other measures to buoy the sector.
Calls for controversial supply management tools have gained little traction in Congress.