12.08.21

Leahy-Led Changes To Federal Dairy Program Will Deliver Millions To Vermont Farmers

(WEDNESDAY, Dec. 8, 2021) — U.S. Senator Patrick Leahy (D-Vt.) Wednesday announced changes made by the U.S. Department of Agriculture (USDA) to the dairy safety net program that will benefit Vermont’s small dairy farms. As it opens enrollment of the Dairy Margin Coverage (DMC) program for 2022, changes to the program sought by Leahy will deliver additional payments to Vermont producers.

A change in how feed costs are calculated will mean an additional $3.1 million in retroactive payments will be distributed to Vermont farmers who were enrolled in DMC in 2020 and 2021, as a direct result of efforts by Leahy in his role as the most senior member of the Senate Agriculture Committee. In addition to the feed calculation change, USDA is also allowing small farms to enroll additional production in the DMC program for farmers who have increased production since 2014. This change will also result in retroactive payments to farmers enrolled in DMC in 2021, and provide additional safety net benefits headed into the 2022 and 2023 seasons.

The changes to the DMC program finalized by USDA this week were first announced by Leahy and U.S. Secretary of Agriculture Tom Vilsack during the Secretary’s visit to Vermont in August.

The DMC program, which Leahy helped establish in the 2018 Farm Bill, operates similar to crop insurance, providing catastrophic coverage for free and additional coverage for a fee based on a farm’s production history. In the case of dairy, the insurance covers the margin, or difference, between feed prices and milk prices. When feed prices rise, milk prices fall, or both happens at once, dairy farmers can be left without enough money after paying for feed to pay other farm expenses. The DMC program allows them to insure that margin.

DMC payments are issued when the margin between feed costs and milk prices falls below the insured level. Feed costs were previously based on 50 percent alfalfa hay. This didn’t accurately reflect what farmers were paying for feed, particularly in the Northeast where feed costs are higher than in other regions of the country. Using the lower cost feed made margins appear larger than they actually were.

In the 2018 Farm Bill, Leahy included a provision directing the National Agricultural Statistics Service to begin collecting data on premium alfalfa prices for the first time. With that data now available, USDA will now use this more accurate market information to calculate the feed price in the DMC.

“The feed cost calculation has long been too low, failing to accurately account for the costs incurred by dairy farmers in Vermont and the Northeast in particular,” said Leahy, who also chairs the Senate Appropriations Committee. “This change will benefit farmers now and in the future at a time when input costs continue to increase at the farm level. I applaud Secretary Vilsack for working quickly to improve the safety net and provide much-needed relief to producers in Vermont and across the country.”

Overall, USDA expects to distribute nearly $23 million to 482 Vermont dairy farms through the DMC program this year.

Farmers seeking to enroll in DMC or update their production numbers should contact their local USDA Service Center. The enrollment period for 2022 begins on December 13 and runs through February 18, 2022. To determine the appropriate level of DMC coverage for a specific dairy operation, producers can use the online dairy decision tool.

The USDA statement on the changes to the DMC may be found here

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