Dairy farmers can enroll in the Dairy Margin Coverage (DMC) for 2024 with your local Farm Service Agency (FSA) office beginning on February 28. Enrollment will be open until April 29. If you previously signed up for the five-year commitment and locked in your coverage, you will still need to pay the $100 administrative fee to stay enrolled in the program.
Dairy Margin Coverage is a risk management tool that dairy farmers can use to help protect their margin, the difference between the milk price and the feed cost. USDA sets the feed cost and milk price; there is a national price calculated for both.
The highest DMC coverage level is $9.50. This will protect the margin from going below $9.50; a payment will be triggered if the margin falls below $9.50. In 2023, DMC paid at the $9.50 coverage level for 11 out of 12 months; only November did not pay. June and July also paid at the catastrophic level, below $4 for the first time.
Dairy farmers who participated in Supplemental DMC in 2022 (for dairy farmers who had under 5 million pounds of annual production) are allowed to make a one-time adjustment to their established production history. This adjustment will be calculated by looking at both supplemental production levels and historical production levels.
Depending on farm size and coverage level, your farm could have up to 95 percent of your annual historic protection with DMC. With many farms selecting Tier 1 (up to 5,000,000 annual pounds) coverage at the $9.50/cwt margin, the DMC program can be an effective talking point when discussing next year’s cash flows and how risk management tools can reduce the financial impact of unexpected milk prices or feed costs.
The Programs on Dairy Markets and Policy’s (DMaP) Dairy Margin Coverage Tool enables you to create producer-specific graphs showing your coverage level and projected monthly price triggers. When discussing your 2024 cash flow sensitivity, it is also important to consider your participation in other risk management programs through your crop insurance agent, such as Dairy Revenue Protection (DRP) or Livestock Gross Margin for Dairy Cattle Insurance (LGM-Dairy).
For more information go to the FSA website.
2023 DMC payments
| Month | Corn ($/bu) | Premium alfalfa hay ($/ton) | Soybean meal ($/ton) | All milk ($/cwt) | Final feed costs for DMC ($/cwt) | Milk margin above feed costs for DMC ($/cwt) | Payment at $9.50 |
|---|---|---|---|---|---|---|---|
| January | $6.64 | $328.00 | $482.40 | $23.10 | $15.16 | $7.94 | $1.56 |
| February | $6.80 | $324.00 | $500.53 | $21.60 | $15.41 | $6.19 | $3.31 |
| March | $6.67 | $314.00 | $484.40 | $21.10 | $15.02 | $6.08 | $3.42 |
| April | $6.70 | $315.00 | $457.25 | $20.70 | $14.86 | $5.84 | $3.66 |
| May | $6.54 | $317.00 | $423.58 | $19.30 | $14.47 | $4.83 | $4.67 |
| June | $6.49 | $310.00 | $413.46 | $17.90 | $14.25 | $3.65 | $5.85 |
| July | $6.22 | $288.00 | $443.15 | $17.40 | $13.88 | $3.52 | $5.98 |
| August | $5.73 | $282.00 | $438.80 | $19.70 | $13.24 | $6.46 | $3.04 |
| September | $5.21 | $288.00 | $411.07 | $21.00 | $12.56 | $8.44 | $1.06 |
| October | $4.93 | $278.00 | $416.16 | $21.60 | $12.16 | $9.44 | $0.06 |
| November | $4.66 | $271.00 | $464.27 | $21.70 | $12.12 | $9.58 | $0.00 |
| December | $4.80 | $275.00 | $440.60 | $20.60 | $12.16 | $8.44 | $1.06 |