With an extremely low milk-feed income margin in July, Dairy Margin Coverage (DMC) insurance program indemnity payments distributed through the USDA’s Farm Service Agency (FSA) continue to mount. Through Sept. 5, DMC indemnity payments for milk marketings in the first seven months of 2023 had reached nearly $1.13 billion.

Natzke dave
Editor / Progressive Dairy

The July DMC milk income over feed cost margin was just $3.52 per hundredweight (cwt), triggering indemnity payments at all Tier I and Tier II insured levels. (Read: July 2023 DMC margin falls to $3.52 per cwt)

Based on latest enrollment data as of Sept. 5, 17,002 dairy operations are enrolled in the 2023 DMC program, representing about 73.6% of operations with established production history. January-July DMC payments averaged $66,355 per dairy operation enrolled. 

Through early September, Wisconsin leads all states in total DMC indemnity payments at $240 million, averaging $56,300 per enrolled operation. That’s followed by (total payments and average payment per dairy operation): California – $126 million and $134,733, New York – $103 million and $57,200, Minnesota – $91 million and $53,114 and Pennsylvania – $87 million and $49,387.

The updated report does not include enrollment in the Supplemental DMC program. All payments are subject to a 5.7% sequestration deduction.


Historical payment totals

With five months remaining in 2023, total DMC payments have nearly equaled the previous annual high of $1.187 billion distributed in 2021. Indemnity payments and average payments per dairy operation in the previous four years were:

  • 2022 – $83.7 million, averaging $4,664 – indemnity payments were triggered in just two months (August and September).
  • 2021 – $1.187 billion, averaging $62,280 – indemnity payments were triggered in 11 of 12 months.
  • 2020 – $234 million, averaging $17,340 – indemnity payments were triggered in five months.
  • 2019 – $451.6 million, averaging $19,319 – indemnity payments were triggered in seven months.

Margin outlook improving

The August DMC margin and indemnity payments will be announced on Sept. 29. Based on milk and feed futures prices at the close of trading on Sept. 13, the DMC decision tool forecasts an August margin of about $6.13 per cwt. Projected margins for the remainder of 2023 are: September – $8.03, October – $8.92, November – $9.65 and December – $10.08. If realized, 2023 indemnity payments would be triggered in 10 of 12 months.

The future of the DMC program – set to expire on Sept. 30 – hinges on the 2023 Farm Bill.