02.08.18

BREAKING: Leahy Secures Key Safety Net Changes For Dairy Farmers In Budget Deal

U.S. Senator Patrick Leahy announced Thursday that he has secured significant improvements to a key dairy safety net program, which are to be included in a bipartisan budget deal package to be considered by Congress this week.  Leahy is the Vice Chairman of the Senate Appropriations Committee and has been working with the panel’s Chairman, Thad Cochran (R-Miss.), to address the needs of dairy and cotton farmers struggling with low prices.  Leahy also is a leading member of the Senate Agriculture Committee, where he has long led on dairy policy issues.

The bipartisan agreement makes substantial improvements to the Margin Protection Program (MPP) for dairy farmers, and it would take effect immediately upon becoming law.  Effective for calendar year 2018, the changes would direct the Secretary of Agriculture to reopen the signup period for the MPP and offer farmers an important new chance to select meaningful levels of risk protection at more affordable rates.  For some family dairy farms, protection costs could drop by 70 percent or more.

Leahy said:  “Making these crucial investments and key changes with immediate effect will help stave off setbacks for dairy farmers who are facing another difficult year without access to meaningful risk management protection.  The dairy forecasts for this Spring are deeply troubling. From talking with dairy leaders in Vermont, I know that without immediate changes to protect farmers in these difficult times we will be facing a crisis situation.”

To further improve the effectiveness of the MPP, the Leahy-authored proposal will also provide that the program-backed benefit is calculated monthly, rather than averaged every two months. This will make the program more responsive to farms that must meet important monthly financial requirements

The dairy proposal also benefits dairy farmers and livestock producers by repealing a cap on subsidies and operating costs for livestock insurance policies.  This $20 million statutory annual limit has severely restricted dairy farmers’ access to the Livestock Gross Margin for dairy and has prevented companies from developing new, innovative insurance products.

Last year, Leahy urged Agriculture Secretary Sonny Perdue to classify milk as a distinct agricultural commodity, and thus be eligible for federal crop insurance coverage.  Perdue, however, did not act on the request.  Eliminating this cap will allow for more companies to develop innovative insurance products for dairy farmers.

The proposal must now be adopted by the full Senate, passed by the House and signed into law by the President.

The Leahy-led dairy provisions make six specific changes:

  • Directs the Secretary of Agriculture to immediately reopen the sign-up period for calendar year 2018 for the Margin Protection Program (MPP) to allow farmers to reevaluate the costs and protections the program can now provide their farm.
  • Immediately moves the MPP calculations and potential payments to a monthly basis (currently bimonthly) to improve the accuracy and timeliness for helping farmers.
  • Immediately cuts the premium costs for Tier I enrollment by nearly 70 percent to incentivize producer participation at meaningful levels of protection and makes that change this year.
  • Raises the Tier I threshold level corresponding to substantially lower premium costs to the first 5 million pounds of production (nationally equivalent to 220 cows), up from the current level of 4 million pounds of production (nationally equivalent to 175 cows). This will better align the program with the median U.S. dairy farm size, 223 cows, and encourage more family farms to participate and secure meaningful levels of protection to offer an effective farm safety net.
  • Waives $100 administrative fees for underserved producers, bringing the program in line with other USDA programs with similar service fee waivers.
  • Repeals the unfair statutory cap for the USDA’s underwriting costs for livestock insurance products.

 

Press Contact

David Carle: 202-224-3693