USDA offers revised milk pricing safety net program; reactions mixed

Marcus Wolf Watertown Daily Times

The widely blasted Margin Protection Program has been reworked with new provisions that have drawn mixed reactions from farmers and lawmakers.

The U.S. Department of Agriculture Farm Service Agency recently announced that its latest version of the program offers reduced premiums and increased coverage that agency officials argued would provide participants with better protection when milk prices fall below production costs.

The revisions were authorized under the Bipartisan Budget Act of 2018.

The updated program now calculates the margin, or difference between milk prices and feed costs, every month instead of every other month; increased the threshold for the tier one payment schedule to farmers who produce more than five million pounds of milk annually, offers reduced payments for that tier and exempts limited resource, beginning, veteran, and disadvantaged producers from administrative fees, according to a news release.

Farmers who were enrolled in the previous program that qualify for the new exemption can also request a refund.

“We encourage dairy producers to review the provisions of the updated program, which Congress shaped with their feedback. Those changes are now in effect, and I’d ask any producers who are interested to contact their local USDA service centers,” said Secretary of Agriculture Sonny Perdue in a statement.

The program was introduced in the 2014 Farm Bill to provide farmers insurance when the margin falls below their selected level of coverage.

Producers across the state, however, have claimed it provides little to no payments to help offset their production costs or justify the program’s administrative fees.

Michael B. Kiechle, who owns Garden of Eden dairy farm in Philadelphia, said he opted out of the original program because he received little to no return for his investment in the past three years.

Mr. Kiechle paid the minimum $100 annually for the $4.00 per hundred weight margin, but he said the margin rarely reached that benchmark.

“It was throwing money away because there was no way I would ever get my $100 back,” he said. “It’s not what was promised.”

The Philadelphia dairy farmer, however, said he may consider signing up for the updated program for its reduced premiums, although he wants to learn more about it before making a decision.

“I’d elect to do it because it might be more positive cash flow,” he said.

Ronald C. Robbins, owner of North Harbor Dairy in Hounsfield, argued that the program “continues to be a failed program” despite the changes.

Mr. Robbins, who had never received a payment from the program since its implementation, said it still doesn’t account for regional differences in the feed costs and milk prices, adding that soy meal and alfalfa are cheaper in other regions of the U.S. than the northeast.

While the newer program may initially help smaller farms, Mr. Robbins said tier two farmers like himself, who would pay higher premiums because they produce more than 5 million pounds of milk annually, would receive no benefit to justify the expenses.

“The bottom line is that it’s a failed program that shouldn’t have been thrown out,” he said.

The revised program has also incited varying opinions from federal lawmakers who represent north country farmers.

Sen. Kirsten E. Gillibrand, D-N.Y., argues that it would still fail to provide enough help to farmers when their production costs exceed their revenue, her office said in a background statement.

The senator has advocated for a $23.34 per hundredweight price floor that would trigger federal aid for producers who earned less than that benchmark for their milk.

She has also pushed for the federal government to reimburse farmers who paid more money for the program than they received.

U.S. Rep. Elise M. Stefanik, R-Willsboro, however, voted in favor of program revisions, which her spokesman, Tom Flanagin, said “will increase the program’s accuracy and reliability” in an email.

Ms. Stefanik also sent a letter she co-wrote with U.S. Rep. Ralph Abraham, R-La., to U.S. Rep. Michael Conaway, R-Texas, who chairs the agriculture committee, on April 10 requesting a provision in the upcoming Farm Bill that would require USDA to evaluate whether the feed cost calculations in the program “reflect individual dairy farmers’ actual feed costs,” then report back to Congress.

“She has been an outspoken advocate for reforming MPP until a new program can be designed as part of the (2018) Farm Bill,” Mr. Flanagin said in an email.

Farmers can sign up for the updated program until June 1. Anyone who is enrolled in the existing program must reenroll for its latest version.