Farms big and small flock to new dairy program

By Philip Brasher

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, D.C., Jan. 16, 2015 - Big farms in California, Idaho and Texas enrolled in a new dairy program that is proving to have a national appeal that its predecessor lacked because of payment limits.

In California, by far the nation's largest producer of milk, 69 percent of the state's 1,515 farms enrolled in the new Margin Protection Program (MPP), according to Agriculture Department data.

Lets Talk Food MPP doesn't have the payment caps of the program it replaced, the Milk Income Loss Contract program, which was targeted toward smaller operations than the ones that dominate production in the West.

Some 66 percent of the farms in Idaho, which ranks No. 4 in total production, enrolled in MPP, while 71 percent of the operations in No. 6 Texas did.

Nationwide, slightly more than half, or about 23,800, of the nation's 47,273 farms enrolled in the program.

The appeal to large farms in western states was not surprising. “By removing the production cap it allows the larger farms to be more represented by their share of production,” said John Newton, an economist at the University of Illinois.

He said the signup rate nationwide was “pretty exceptional” given that during much of the signup period there was little expectation that producers would receive payments in 2015. 

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Farms are still unlikely to receive payments at the basic level of coverage, which is essentially free, requiring only a $100 administrative fee. The basic coverage level pays off only when the margin between milk prices and feed costs is less than $4 per hundred pounds.  USDA currently expects the price to stay above $6 this year.

Fifty-five percent of farms nationwide opted for higher levels of coverage, which come with premiums. Thirty-five percent of California producers chose the buy-up coverage.

 

Overall signup rates for MPP were notably lower in some Midwest and Northeast states, but those regions have far more farms, typically smaller those in the West.

Wisconsin, which ranks second to California in total production, has 54 percent of its total farms enrolled in MPP, or 5,864 producers, the most of any state.

In New York, which ranks No. 3 in total milk production, 48 percent of the farms enrolled, or 2,414. Another 2,160 farms enrolled from Pennsylvania, which ranks fifth in milk production. Those operations represent 30 percent of Pennsylvania's dairy farms.

California produced 41 billion pounds of milk in 2013, or about 27 million pounds per farm. Wisconsin's 10,860 farms produced 27.6 billion pounds, or about 2.5 million pounds per operation. Payments under the old MILC program were limited to less than 3 million pounds of a farmers' production.

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