Enrollment for Dairy Margin Management Program Begins September 2
The USDA announced today that the new Dairy Margin Management Program (MPP) will be open for enrollment starting next Tuesday, September 2, 2014. Enrollment will end November 28, 2014 and dairy farmers will be able to retroactively enroll back to September 1 for 2014 and enroll for all of 2015. The elections are separate for 2014 and 2015, i.e. you can elect different coverage levels for each year.
The USDA is also providing a management tool for dairy farmers to help in making this election. This decision tool allows the dairy farmer to play various what-ifs to determine the estimated premium costs based upon the coverage elected and estimated payments assuming various future milk and feed costs. The online section also provides for a Livestock Gross Margin (LGM) for Dairy analysis tool.
Remember that dairy farmers can either elect MPP or LGM, but not both. The LGM is an insurance program, while the MPP is a separate commodity program. If a dairy producer has signed up for LGM that will run past the September 1, 2014 MPP beginning date, there is a transition period available for the producer.
If farmers enroll in MPP, they are locked into using it through 2018. However, the only cost to the dairy farmer is an $100 per year administrative fee if they elect the $4 coverage. Coverage in excess of $4 (up to $8) will result in additional premiums owed based upon the amount of coverage elected. Premiums on up to 4 million pounds of coverage will result in much lower premiums.
The proposed regulations will be published on August 29, 2014 and the USDA is offering a 60 day window for dairy producers to comment and provide feedback to the USDA on how well the program is being administered including whether the regulations adequately address management changes, such as adding family members or inter-generational transfers.
We will keep you posted.
Paul Neiffer, CPA
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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