Driven by improvements made by Congress in the Bipartisan Budget Act of 2018 and the Agriculture Department’s efforts to inform dairy farmers about the enhanced program, as of early July more than 21,000 dairy farm operations had enrolled in the Dairy Margin Protection Program for the 2018 coverage year. More are putting the final touches on their enrollment applications. Once final enrollment is tallied, more than 50 percent of licensed dairy operations in the U.S. will be participating. These farmers purchased MPP coverage on 131 billion pounds of milk, representing approximately 60 percent of the U.S. milk supply.
The total number of dairy farms enrolled in MPP for 2018 was up nearly 1,000 farms, or 5 percent, from 2017 enrollment levels. However, while farm enrollment was up over prior-year levels, the amount of covered milk was down 14 billion pounds. The decline in covered milk is likely due to farmers opting to purchase protection as close to 5 million pounds as possible – the average volume of covered milk per farm is slightly higher than 6 million pounds. More important than enrollment levels, however, is how farmers are using the program to protect against the risk of margin declines.
In 2016 and 2017, fewer than 25 percent of participating dairy operations elected buy-up coverage above the catastrophic $4 per hundredweight coverage level. This year, 95 percent of the enrolled dairy operations elected buy-up coverage and many of those farms elected the highest coverage level – $8 per hundredweight. USDA’s flexibility in allowing farmers to finalize coverage options until June 22 contributed to the upturn in buy-up coverage participation.
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