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Margin Protection Program for Dairy Producers

Posted: December 23, 2014

The program provides financial assistance to participating farmers when the margin, the difference between the price of milk and feed costs, falls below the coverage level selected by the farmer.

The Margin Protection Program for Dairy Producers (MPP), a government-sponsored insurance initiative to help the nation’s dairy farmers mitigate their financial risks, was rolled out in September as part of the Agricultural Act of 2014. The program provides financial assistance to participating farmers when the margin, the difference between the price of milk and feed costs, falls below the coverage level selected by the farmer.

In 2009, and again in 2012, the dairy industry suffered devastating low margins, with many farms being paid far less than the cost to produce the milk. Some dairies went out of business while others survived by borrowing against their equity in the farm. Whatever the case it was definitely an education in the need for risk management on the farm.

Agriculture, and particularly dairy, remains a large part of the economy of Central Pennsylvania. On October 30th, Penn State Extension hosted an information meeting in the Mifflintown area to inform dairy producers of their options with MPP, and to help them make informed decisions as to what coverage is needed for their farm business.

During two workshops a total of 25 producers from the Juniata Valley heard from Gary Hennip, Penn State Extension Dairy Team Member, about how the program works. He explained how the margin is calculated and what factors affect it. There was also a great deal of discussion around the level of coverage one should I sign up for. While there is no one size fits all answer to that question, producers where provided with a few pointers and worksheets to help them look at their individual operation, and then determine which level is appropriate for their specific needs. What it boils down to is each producer must look at their financial information and decide what level of risk they are willing to except.

More information about continuing education for a dairy producer on the Dairy Margin Protection Program.

Contact Information

John Tyson
  • Agricultural Engineer, Educator
Phone: 717-248-9618