Administered by the Farm Service Agency of the US Department of Agriculture (USDA), the dairy margin coverage (DMC) program offers protection to dairy producers when the difference between the all-milk price and the average feed price falls below a certain dollar amount selected by the producer.
Compared with 2020 enrollment of 13,532 operations, the participation in the DMC program for 2021 increased to cover nearly 18,500 operations nationwide - an additional 4,900 US dairy operations, reported the USDA.
“This enrollment success is a testament to the value of DMC to dairy operations."
The DMC has paid out more than US$500m in program benefits to dairy operations enrolled in calendar years 2019 and 2020.
USDA has other dairy risk management program options besides the DMC – they include the Dairy Revenue Protection (DRP), and Livestock Gross Margin for Dairy Cattle (LGM) programs.
US dairy inventories ample, but food box program provides release valve
A CoBank quarterly report, published this month, looking at prospects for the US dairy sector, among other US industries, shows milk and dairy products ended 2020 in ample supply despite the seasonal spike in holiday demand, which was down significantly compared to prior years.
That could lead to even greater surplus supply issues for dairy producers and processors leading into the 2021 spring flush, found the authors.
“The broad-based rise in milk production across the US hints at strong industry-wide momentum carrying over into the critical spring flush months in March and April despite rising feed prices and a drop in milk prices.
“Heading into a potential oversupply situation this spring, processors may be faced with imposing production limits on producers in some regions.”
They said the USDA’s fifth round of food purchases under the Farmers to Families Food Box Program will be a needed short-term release valve for dairy products in the opening months of 2021.
US foodservice demand continues to be hindered with the rollout of COVID-19 vaccines taking longer than expected, while restaurant demand continues to struggle through the cold weather months, particularly in northern regions of the US where outdoor dining can be problematic, noted the report.
“While cheese has been a major beneficiary from the pandemic with demand increasing from the substantial increase in delivered pizza and fast casual food demand, total consumer dairy demand remains hobbled until the foodservice sector is back firing on all cylinders.”