Dairy producers say changes not enough
The U.S. Department of Agriculture has begun releasing details about changes to a federal dairy insurance program that has been widely derided by dairy producers — but some Douglas County dairies say the changes leave them underwhelmed.
"It really doesn't sound like it changed much," said Max Radil, who milks 100 cows near Alexandria and had been waiting for details on the changes. "I was looking for something that would be more of a benefit."
On Thursday, April, 5, the Douglas County Farm Service Agency released a description of the changes to the Margin Protection Program for Dairy, which is designed to pay farmers when low dairy prices combine with high feed costs. It highlighted four changes to the program:
• Calculations of the margin period are monthly rather than bi-monthly. With fluctuating milk prices, this may help address losses more quickly.
• Bigger milk producers will obtain cheaper coverage. Previously, only the first four million pounds of milk each year qualified for the cheaper Tier 1 premiums. Now, the first five million pounds will qualify. Farmers producing five million pounds of milk a year typically milk between 190 and 240 cows. This change generally won't benefit most Douglas County farmers, as most milk fewer than 100 cows.
• Premium rates for Tier 1 are substantially lowered to close to a quarter of what they had been. This will benefit dairy farms of all sizes. The Tier II rates, for more than five million pounds a year, remain the same.
• Limited resource, beginning, veteran, and disadvantaged producers are exempt from paying an administrative fee. Dairy operators enrolled in the previous 2018 enrollment period that qualify for this exemption under the new provisions may request a refund.
Dairy farmers are in the fourth year of poor milk prices that have seen retirement-age farmers getting out of the business rather than take on debt, and young farmers shouldering massive debt in hopes of surviving until milk prices climb again. They have criticized the Margin Protection Program as insufficient to help them survive the troubled dairy economy.
The Farm Service Agency calls the changed program "the new and improved Margin Protection Program for Dairy," and says it will provide better protections for dairy producers from shifting milk and feed prices. The changes were authorized under the congressional Bipartisan Budget Act of 2018, and the enrollment period runs from April 9 to June 1.
Radil said his farm ponied up $2,000 for last year's insurance, but failed to recover anything beyond that amount as milk prices lagged.
"We need some price protection," he said. "The way they had it figured, even when the price dropped to nothing, they didn't cover anything. We got our premiums back was all it covered. They needed to make some changes to how they figured the price support because the way it was wasn't working."
In Parkers Prairie, Dennis Noetzelman said he considers dropping out of the dairy business every day. At 67, he has been in dairy his entire life. Dairy prices have been worse, but he considers the economics now facing the dairy industry the worst he's ever seen because low prices have lasted so long.
The changes to the federal insurance program might help a little, he said, but he predicts dairy farmers will be "skittish" about jumping into another price protection program. They might have to spend the premium costs for spring planting, he said.
Noetzelman did say he'd be willing to consider re-enrolling.
"It's in our blood," he said. "A dairy farmer doesn't give up too easy."
The government is also updating an online tool that it says will allow dairy farmers to quickly calculate their coverage needs based on price projections. The online resource, which will be available by April 9, is at www.fsa.usda.gov/mpptool.