The U.S. Department of Agriculture (USDA) extended the deadline to enroll in Dairy Margin Coverage (DMC) and Supplemental Dairy Margin Coverage (SDMC) for program year 2022. The deadline to apply for 2022 coverage is now March 25, 2022.

USDA’s Farm Service Agency (FSA) opened DMC and SDMC signup in December 2021 to help farmers manage economic risk brought on by milk price and feed cost disparities.

“Over the past two years, American dairy farmers have faced unprecedented uncertainty, from the ongoing pandemic to protracted natural disasters. As producers continue to manage these interconnected challenges, FSA has tools at the ready to provide critical support,” FSA Administrator Zach Ducheneaux said. “We are encouraging dairy operations to take advantage of the extended deadline and join the 8,969 operations that have already enrolled for 2022 coverage. At 15 cents per hundredweight at the $9.50 level of coverage, DMC is a very cost-effective risk management tool for dairy producers.”

Enrollment for 2022 DMC is currently at 55% of the 2021 program year enrollment. Farmers who enrolled in DMC for 2021 received margin payments each month, January through November for a total of $1.2 billion, with an average payment of $60,275 per operation.

The DMC program, created by the 2018 Farm Bill, offers reasonably priced protection to dairy farmers when the difference between the all-milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the farmer.

Supplemental DMC will provide $580 million to better help small- and mid-sized dairy operations that have increased production over the years but were not able to enroll the additional production. Now, they will be able to retroactively receive payments for that supplemental production.

FSA also updated how feed costs are calculated, which will make the program more reflective of dairy farmers’ actual expenses.

Supplemental DMC enrollment
Eligible dairy operations with less than 5 million pounds of established production history may enroll supplemental pounds based upon a formula using 2019 actual milk marketings, which will result in additional payments. Farmers will be required to provide FSA with their 2019 Milk Marketing Statement.

Supplemental DMC coverage is applicable to calendar years 2021, 2022 and 2023. Participating dairy operations with supplemental production may receive retroactive supplemental payments for 2021 in addition to payments based on their established production history.

Supplemental DMC will require a revision to a farmer’s 2021 DMC contract and must occur before enrollment in DMC for the 2022 program year. Farmers will be able to revise 2021 DMC contracts, apply for 2022 DMC, and enroll in other FSA programs by contacting their local USDA Service Center.

DMC 2022 enrollment
After making any revisions to 2021 DMC contracts for Supplemental DMC, producers can sign up for 2022 coverage. DMC provides eligible dairy farmers with risk management coverage that pays farmers when the difference between the price of milk and the cost of feed falls below a certain level. In 2021, based on data to date, DMC payments have triggered for January through November for more than $1 billion.

For DMC enrollment, farmers must certify with FSA that the operation is commercially marketing milk, sign all required forms and pay the $100 administrative fee. The fee is waived for farmers who are considered limited resource, beginning, socially disadvantaged or a military veteran. To determine the appropriate level of DMC coverage for a specific dairy operation, farmers can use the online dairy decision tool.

Updates to feed costs
USDA also changed the DMC feed cost formula via final rule published on Dec. 13, 2021, to better reflect the actual cost dairy farmers pay for high-quality alfalfa hay.

FSA now calculates payments using 100% premium alfalfa hay rather than 50%. In December 2021, following publication of the new feed cost policy, $102 million was paid to farmers as a result of the revised high quality alfalfa feed cost formula.

The amended feed cost formula will make DMC payments more reflective of actual dairy farmer expenses.

More Information
For more information, farmers can visit the FSA dairy programs webpage, or contact their local USDA Service Center. To locate their local FSA office, farmers can visit farmers.gov/service-center-locator. Due to the pandemic, some USDA Service Centers are open to limited visitors.

More information related to USDA’s response and relief for producers can be found at  farmers.gov/coronavirus.