Transition Period for LGM-Dairy to DMM is Announced by FSA

The 2014 farm bill now provides for a new Dairy Margin Management (DMM) program.  Dairy farmers have been able to take advantage of Livestock Gross Margin-Dairy (LGM-Dairy) under current crop insurance provisions.  However, the 2014 bill provides that a dairy farmer cannot take advantage of both programs to prevent “double-dipping”.  In addition, the LGM-Dairy insurance program can extend into 2015 after the DMM is scheduled to start in September, 2014.  This presented concerns regarding dairy farmers wanting to sign-up for DMM but being prevented since they were already enrolled in LGM-Dairy.

To address these concerns, the FSA just released Notice LD-637 providing a transition period for these farmers.  Essentially, the transition allows the dairy farmer to sign up for DMM, but not start the program until their contract under LGM-Dairy expires.  Since the DMM payments cover a two-month period at a time, there is a chance a dairy farmer would have no coverage for a full month.

For example, if a dairy farmer has a LGM-Diary contract through February 28, 2015, their DMM coverage would start March 1, 1015.  However, if their LGM-Diary contract expired March 31, 2015, their DMM coverage would not start until May 1, 2015.

Paul Neiffer, CPA