NMPF Urges DMC Signup as USDA Announces Enrollment

Statement from NMPF President & CEO Gregg Doud:

“Dairy farmers are pleased to finally have the certainty of knowing when the Dairy Margin Coverage (DMC) program signup is beginning, and NMPF urges every dairy farmer to strongly consider signing up. DMC itself is improved from the previous farm bill, thanks to the permanent incorporation of updated production histories in the program, and recent low producer margins underscore just how critical DMC is for dairy farms of all sizes. We thank Congress for making this important change and are grateful for USDA’s work in rolling out this updated program for farmers.

“NMPF is eager to assist producers in any way they can with this program. We also look forward to working to ensure that farmers receive what they need even more – a new farm bill that provides certainty for the next several years, and not just 2024.”

USDA announced today that the 2024 Dairy Margin Coverage sign-up will open Feb. 28 and run through April 29. For more NMPF resources related to the DMC program and other federally backed risk management programs, visit here.

NMPF’s Vitaliano Offers 2024 Dairy Economic Outlook

 

NMPF’s Vice President of Economic Policy Peter Vitaliano provides Dairy Radio Now listeners a look ahead at what farm-level milk prices will do in 2024. Farmers should benefit from lower feed costs, and with milk production expected to remain stagnant again this year, prices should gradually improve.

December DMC Margin Reverses Trend, Drops to $8.44/cwt

The December margin under the Dairy Margin Coverage (DMC) program bucked the trend that began in August of improving milk prices and margins, sliding $1.14/cwt to $8.44/cwt and matching the margin last seen in September. The renewed weakness was due almost entirely to a $1.10/cwt fall in the December all-milk price from November. The December DMC feed cost rose by 4 cents a hundredweight to $12.16/cwt of milk, with higher corn and premium alfalfa hay prices almost offset by a lower soybean meal price.

The average margin for all months of 2023 was $6.70/cwt, effectively tying last year with 2021 for the lowest average calendar-year margin under both the DMC and its predecessor, the Margin Protection Program (MPP). End-of-January futures-based forecasts indicated DMC margins averaging between $10.20/cwt and $11.00/cwt in 2024.

November DMC Margin Barely Tops $9.50 for the First Time in 2023

The November margin under the Dairy Margin Coverage (DMC) program inched up $0.14/cwt from a month earlier to $9.58/cwt, marking its first time in 2023 above the maximum $9.50/cwt Tier 1 coverage level.

The monthly change was a product of modest price movements. The all-milk price rose $0.10/cwt to $21.70/cwt, while the DMC feed cost formula dropped $0.04/cwt to $12.12/cwt of milk. There was a bit more drama inside the DMC feed cost formula, with a $0.35/cwt increase in the soybean meal price factor slightly more than offset by a combined drop in the prices of corn and premium alfalfa hay. During the first ten months of this year, the average monthly change, plus or minus, in the margin was $1.22/cwt, the average monthly change in the all-milk price was $1.15/cwt and the average monthly change in the DMC feed cost was $0.37/cwt.

With one more month in to be reported for last year, the 2023 average margin is on track to average about $6.80/cwt, which would be the second-lowest margin for the DMC and its predecessor Margin Protection Program (MPP), just above 2021’s average DMC margin of $6.70/cwt. The end-of year futures prices indicated the margins would average about $8.60/cwt during January-September this year but improve during the fourth quarter to average about $9.10/cwt for the year.

DMC Margin Gains $1 in October

The Dairy Margin Coverage (DMC) Program margin in October saw another significant monthly increase, as the futures markets had been anticipating. The all-milk price rose $0.60/cwt from September to $21.60/cwt., and the October DMC cost was down by $0.40/cwt to $12.16/cwt., mostly due to a lower corn price. The October margin was therefore $9.44/cwt, generating just a 6-cent margin payment for coverage at the $9.50/cwt Tier 1 level.

The dairy and grain futures markets are anticipating the substantial increases the DMC margins  have made over the past three months, from $3.52/cwt in July to October’s $9.44/cwt, have hit pause, and the margin will remain at or modestly below the $9.50/cwt level for the next several months.

NMPF Secures Continued DMC Production History Boost in Farm Bill Extension

NMPF worked closely with the House and Senate Agriculture Committees last month to finalize a one-year farm bill extension that was signed into law Nov. 17 as part of a larger government funding bill.

The extension continues the successful Dairy Margin Coverage program for 2024. At NMPF’s urging, it also incorporates the 2019 partial production history update, previously known as Supplemental DMC, into the underlying DMC safety net.

Through 2023, Supplemental DMC offered payments to those producers whose DMC production history was below five million pounds, but whose actual production had increased to that level by 2019. Eligible farmers received payments totaling 75 percent of the difference between their actual 2019 production and their DMC production history. Enactment of the farm bill extension now converts this supplemental program into a base production history update within DMC, ensuring it will continue going forward without requiring a separate extension.

Congress’s move also funds those programs that did not have a budget “baseline” to ensure that they would be funded into the next farm bill. This includes the Foundation for Food and Agriculture Research, which was created in the 2014 Farm Bill with NMPF’s support to leverage both private and public resources to maximize agricultural research needs.

NMPF thanked congressional leaders for their work on the extension and reinforced the importance of passing a five-year farm bill as soon as possible. “We commend House and Senate Agriculture Committee Chairs Glenn Thompson and Debbie Stabenow, as well as Ranking Members David Scott and John Boozman, for their bipartisan work to finalize this farm bill extension as part of the congressional spending agreement President Biden signed today,” NMPF president and CEO Jim Mulhern said in a statement. “With this bill passed, we stand ready to work closely with the House and Senate Agriculture Committees to deliver a strong, five-year farm bill as swiftly as possible.”

Overcoming challenges is what we do

By Randy Mooney, Chairman, NMPF Board of Directors

We’ve had a lot of achievements this year, but it’s also been a challenging time.

A year ago, costs on the farm were extremely high, but we had prices that would cover that. This year, costs are still high, but prices are down. That’s a lot of stress on the farm. And we’re also dealing with problems that we’ve dealt with for years.

There are labor problems; you just can’t find anybody to work. Supply chain disruptions are closer to the farm this year. It’s milk trucks getting milk off the farm; it’s feed trucks bringing feed into the farm. It’s getting simple parts that we took for granted we could get anytime we wanted to. There are geopolitical issues and extreme weather events.

We have challenges all the time, but it just seems like we continue to have more. It seems like we’re in the eye of a storm. But as farmers, we always anticipate a moment before the dawn, before things turn, before things get good again.

One of the things I’ve learned is that a lot of the world is envious of what we have.

They’re envious because we have the Farmers Assuring Responsible Management (FARM) Program, a self-governing program. We have a government that recognizes what we’re doing with sustainability — it’s not being mandated down from the top.

We’re taking care of our own. Today, we produce more milk using fewer and fewer natural resources. We’re revitalizing rural communities. For every dollar generated in dairy farming, it turns over three to seven times in local communities, generating $750 billion in the United States. That‘s pretty impressive.

We’re nourishing families around the world through milk’s unbeatable nutritional value. I’ve dairy farmed for a long time, through good times and bad times, but there’s never been a time that I haven’t laid my head down on my pillow at night and been proud of what I accomplished on my farm. We’re putting the most nourishing, most nutritious product known to man in that milk tank. And when that truck leaves, I know I’ve done something good.

Our ability to evolve how we work and adapt our resiliency is becoming more and more important. This year, we came together as an industry to unite around issues that helped build that resiliency. NMPF worked with member co-ops, farm bureaus, and state dairy organizations to come to consensus on the most substantial issues. Even going back to 2021, when you talk about Federal Milk Marketing Order modernization, we’ve worked hard to get these things done. Nobody knows what the outcome’s going to be, but you telling your story has made a difference.

Beyond that, we’re going to get a farm bill passed — we’re going have an extension. We’ve been working to implement the next version of FARM, FARM 5.0, that goes into effect in July. We also will work on promoting dairy’s sustainable nutrition. Dairy offers the most complete nutritional package available, and what’s amazing is that as we produce more milk, we’ll continue to use fewer natural resources. That’s the definition of sustainable nutrition.

For years, we’ve talked about sustainability in terms of environmental stewardship and how that translates into financial value for farms. Now, the financial values are there. You take solar panels, wind, methane digesters, and a lot of things happen on a farm that’s generating electricity to run your farms and to run your neighbor’s households. We’re there now. What we need is conservation funding in the farm bill through USDA grants through state and federal programs. There’s real money available to help us continue to do that, and we will.

No imitation food from a nut, a bean, or grain can hold a candle to dairy’s nutritional package. We all know that. That’s why it’s important to keep fighting the fight on plant-based alternative labeling. In the guidance that was issued earlier this year, the Food and Drug Administration (FDA) recognized and admitted that plant-based alternatives are nutritionally inferior to real dairy.

Dairy protein plays a critical role in feeding people around the world, and it can’t be replaced by alternatives, including plant-based. Consumers have the right to understand how they’re nourishing their families, and we’re going to continue to advocate for the Dairy PRIDE Act to try to get that passed in Congress.

We’re going to continue to fight for more flavored milk in schools and higher fat levels, especially for those children whose main source of nutrition is through the school milk program. Milk is essential to their diets, and we’re not going to give up that fight. We’re all part of an industry that’s doing remarkable things. We are winning.


This has been adapted from Chairman of the NMPF Board of Directors Randy Mooney’s speech at the National Milk Producers Federation annual meeting in Orlando, Fla., on Nov. 14, 2023. This column originally appeared in Hoard’s Dairyman Intel on Nov. 22, 2023.

NMPF Statement on Farm Bill Extension in Funding Law

From NMPF President & CEO Jim Mulhern:

ARLINGTON, VA – “We commend House and Senate Agriculture Committee Chairs Glenn Thompson and Debbie Stabenow, as well as Ranking Members David Scott and John Boozman, for their bipartisan work to finalize this farm bill extension as part of the congressional spending agreement President Biden signed today.

“Along with continuing critical programs for dairy farmers, the legislation allows the Dairy Margin Coverage program to continue operating without the uncertainty of a potential disruption. DMC is an important and effective safety net for dairy farmers nationwide. This legislation includes the 2019 production history update as part of the program, and we look forward to 2024 DMC sign-up in the coming weeks.

“With this bill passed, we stand ready to work closely with the House and Senate Agriculture Committees to deliver a strong, five-year farm bill as swiftly as possible.”

NMPF’s Mulhern Reflects on Policy, Legacy

NMPF President & CEO Jim Mulhern, who is retiring at the end of this year after a decade at the helm of the organization, discusses dairy’s current policy challenges in an interview with RFD-TV. “A lot of this focus of the farm bill for us is in the bucket of either economic risk management issues, conservation issues, trade issues, and nutrition,” he said. “I would say the biggest challenge for the future is to lean in, to take on the challenges that we all see out there and look for workable solutions.”

https://www.youtube.com/watch?v=72GkFekL_Nw

DMC Margin Gains Almost $2 in September

The Dairy Margin Coverage (DMC) margin in September rose rapidly from August, as markets have been anticipating for months. The margin was $8.44/cwt for the month, rising $1.98/cwt over August, which itself was up almost $3 from July’s record low of $3.52/cwt.

As with the August increase, September’s DMC margin rise was driven primarily by a higher all-milk price, which rose by $1.30/cwt over August to hit $21.00/cwt. The September DMC feed cost formula shed $0.68/cwt, due mostly to a lower corn price, with a smaller drop in the September soybean meal price partially offset by a small rebound in the price of premium alfalfa hay.

The September margin will generate $1.06/cwt payments to $9.50/cwt DMC Tier 1 coverage. The futures markets are currently expecting the DMC margin to hover around that maximum coverage level each month during the fourth quarter of the year.