Editor's note: This article has been updated from the original, noting that the DMC hay adjustment payments are subject to a sequestration deduction rate of 5.9% on 2020 payments and 5.7% on 2021 payments. The USDA’s implementation of higher hay prices used in feed cost calculations will have an impact on the largest number of dairy producers participating in the Dairy Margin Coverage (DMC) program.

The USDA has released eagerly awaited details related to the Dairy Margin Coverage (DMC) program. The announcement, Dec. 8, covers:

• Creation of a supplemental DMC provision for small and midsized dairy producers to update milk production history
• Adjustments in determining average hay prices to calculate monthly feed costs and margins
• Establishment of a sign-up period for 2022 program enrollment

A few questions remain, but here’s what we know so far. Check back with Progressive Dairy for updates.

Progressive Dairy provides monthly online updates of important dates and reports affecting risk management decisions.

Progressive Dairy provides monthly online updates of important dates and reports affecting risk management decisions.

The USDA’s monthly Milk Production report was highlighted by dramatic reductions in cow numbers for both August and September. Combined with weakness in milk production per cow, September’s year-over-year growth in milk production was the smallest since May 2019-20, when COVID-19 pandemic market disruptions led to widespread implementation of base-excess programs.

Digest Highlights

• Thirty-nine percent of dairy cows in ‘drought' areas
• O’Brien to succeed Gallagher as head of DMI
• Multichannel checkoff campaign launched to reach Gen Z
• Stonyfield to take in some Northeast farms facing contract terminations
• Agropur adding Wisconsin cheese production capacity
• CDI building UHT-ELS fluid plant
• USDA grant to fund algae dairy feed research
• The number of the week: Dairy consumption
• Coming up: PVMAP details; September uniform prices and PPDs

The phrase, “The gorilla in the room” is often used to describe something that is obvious yet ignored.

The Dairy Margin Coverage (DMC) program set three new records in August: (1) the highest total monthly average feed costs; (2) the smallest average milk income over feed cost margin; and (3) the largest indemnity payments for any month in the history of the dairy safety net program.

With fall harvest dominating your days, keeping tabs on risk management may be secondary. To help keep track of price protection opportunities, Progressive Dairy provides monthly online updates of important dates and reports affecting risk management tools.

Editor’s note: This article has been updated from the original to include additional comments from the American Dairy Coalition. As calls for reforms to the Federal Milk Marketing Order (FMMO) system grow louder, one “hot button” issue remains under fire. At least one dairy organization wants to keep producer pressure on that issue to ensure a long-term equitable outcome.