Calls for Improvement to US Dairy Farm Safety Net
US - The challenging economic conditions affecting America’s dairy farmers call for improvements by Congress to the federal safety net program created in the 2014 Farm Bill, according to Randy Mooney, chairman of the National Milk Producers Federation (NMPF).
25 May 2016
2 minute read
Mr Mooney was giving testimony on Tuesday before the House Subcommittee on Livestock and Foreign Agriculture.
The hearing focused on the state of the livestock sectors in America, including dairy farming – which is facing the worst global turndown in milk prices since 2009.
Mr Mooney, a dairy farmer from Rogersville, Missouri, who also serves as chairman of Dairy Farmers of America, urged the committee to work with NMPF to reassess how the dairy Margin Protection Programme (MPP) can be improved in the future.
“I’m confident that the MPP is the right dairy program for the future,” Mr Mooney said of the programme, which was developed following the recession-induced dairy price crash seven years ago. The programme offers dairy farmers the ability to purchase insurance-type coverage against poor margins caused either by low milk prices or high feed costs.
“But the programme is not completely fulfilling its intended objective as an effective safety net. For many farmers, the MPP is simply not enough to protect them in this economic environment.”
Mr Mooney explained that when the Farm Bill was written, the MPP formula for calculating feed costs was altered, which understated the true cost of feeding a dairy herd. At the same time, while the feed cost element was diminished, the farmer cost of insurance premiums was not reduced. The MPP “has been less effective as a result,” Mr Mooney said.
“In 2015, many farmers saw that the MPP didn’t pay out much, even at the highest levels of coverage. So in 2016 they opted for the least expensive – and minimal – level of coverage available. Had Congress not reduced the feed ration, more farmers would have seen benefits in 2015 and participated at higher levels this year,” he said.
Mr Mooney said that the MPP remains a work in progress, and that farmers want to work with Congress and the USDA to “improve the effectiveness of MPP for all dairy producers.” He said recent administrative changes made by USDA to the program will enhance the MPP’s flexibility and make it more useful for farmers.
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