By USDA Farm Service Agency
You’ve seen the advertisements – the squawking duck, the intellectual gecko, a car named Brad, or the jingle transporting someone from danger.
While insurance commercials are fun, premiums are not. Perhaps the least enjoyable of all, however, is when financial crisis hits in the wake of a disaster. That’s when a safety net becomes worth the upfront costs.
For dairy, the 2014 Farm Bill created the Margin Protection Program, which provides financial assistance to dairy producers when the gap between the price of milk and the cost of feed costs narrows to a selected coverage level. For those enrolled, when national margins get squeezed, help becomes available.
For just $100 a year and the stroke of a pen, every producer can receive basic catastrophic protection that covers 90 percent of dairy production at $4 margins. And for additional premiums, operations can protect as little as 25 percent of production history from margins as broad as $8.
The Margin Protection Program is neither automatic nor retroactive – you must enroll first, before disaster strikes, to receive protection. Nobody likes fees in good times, but had the program existed during the dairy downturn of 2009, assuming current participation, the $73 million invested in premiums would have returned $1.4 billion in financial assistance to enrollees. In fact had the Margin Protection Program existed from 2009-2014, premiums and fees would have totaled $500 million while providing producers with $2.5 billion in help, nearly $1 billion more than provided by the Milk Income Loss Contract program during the same period.
Half of the nation’s dairy producers are enrolled in the Margin Protection Program. The deadline to enroll is Friday. Visit www.fsa.usda.gov/dairy to sign-up or learn more.
 


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