Washington—The USDA opened signup for the Dairy Margin Coverage (DMC) program and expanded the program to allow dairy producers to better protect their operations by enrolling supplemental production.

The signup period, which runs from Dec. 13, to Feb. 18, 2022, enables dairy producers to get coverage through this safety-net program for another year as well as get additional assistance through the new Supplemental DMC.

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, USDA explained. Now, they will be able to retroactively receive payments for that supplemental production.

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, USDA explained. Producers will be required to provide USDA’s Farm Service Agency (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.

Supplemental DMC will require a revision to a producer’s 2021 DMC contract and must occur before enrollment in DMC for the 2022 program year. Producers will be able to revise 2021 DMC contracts and then apply for 2022 DMC by contacting their local USDA Service Center.

“The supplemental program has been long anticipated and we are grateful not only to Secretary Vilsack and the staff at USDA, but also to the members of Congress who championed this effort and brought it to fruition,” said Steve Etka, spokesperson for the Midwest Dairy Coalition. “Expansion of this safety net program will ensure it can bring much-needed help to dairy farm families.”

After making any revisions to 2021 DMC contracts for Supplemental DMC, producers can sign up for 2022 coverage. DMC provides eligible dairy producers with risk management coverage that pays producers when the difference between the price of milk and the cost of feed falls below a certain level. So far in 2021, DMC payments have triggered for January through October for more than $1.0 billion.

USDA is also changing the DMC feed cost formula to better reflect the actual cost dairy farmers pay for high-quality alfalfa hay. FSA will calculate payments using 100 percent premium alfalfa hay rather than 50 percent. The amended feed cost formula will make DMC payments more reflective of actual dairy producer expenses, USDA said.

The National Milk Producers Federation (NMPF) is urging farmers to sign up for maximum coverage in 2022 under the DMC program.

“Signing up for DMC, which offers cost-effective margin protection for small- and medium-sized producers as well as inexpensive catastrophic coverage for larger dairies, is a no-brainer for 2022, especially considering the improvements we fought for in Congress and advocated for at USDA,” said Jim Mulhern, NMPF’s president and CEO.

Dairy Indemnity Program Changed

USDA is also amending Dairy Indemnity Payment Program (DIPP) regulations to add provisions for the indemnification of cows that are likely to be not marketable for longer durations, as a result, for example, of per- and polyfluoroalkyl (PFAS) substances.

Under the DIPP, USDA is authorized to indemnify affected farmers and manufacturers of dairy products who, through no fault of their own, suffer income losses with respect to milk or milk products containing harmful pesticide residues, chemicals, or toxic substances, or that were contaminated by nuclear radiation or fallout.

A final rule to be published by USDA in the near future amends the DIPP regulations to indemnify affected farmers for depopulating and permanently removing cows in certain situations.

The final rule is also amending the amount of time a dairy is eligible to receive indemnification for milk under DIPP. Both changes are discretionary.

For certain affected farmers, elevated levels of PFAS chemical residues in their dairy cows has led to extended participation in DIPP, resulting in the need to consider an appropriate change under DIPP to better address these circumstances, USDA noted. Because efforts to investigate and address PFAS by the federal government are ongoing and additional studies are needed to understand how to significantly reduce accumulated PFAS levels in dairy cows, affected cows may be determined likely to be not marketable for a lengthy duration.

Currently the science related to PFAS is evolving, USDA explained.

The Farm Service Agency carefully considered the circumstances and determined that in cases where dairy cows are likely to be not marketable for a lengthy duration, as determined by USDA, the affected cows would be eligible for depopulation.

The potential increase in these situations requires this change in DIPP policy for contaminated milk and other similar events resulting in milk and cows that are likely to be not marketable for longer durations, USDA explained. Therefore, the amended rule:

• Limits indemnification of milk due to chemical residues to three months to monitor chemical levels, unless an extension is approved, removing the cows from milk production during that time; and • Provides indemnification of the cows through DIPP where the cows are likely to be not marketable for three months or longer (from the date the affected farmer submits an application for cow indemnification).