2026 Dairy Margin Coverage Program Enrollment is Now Open!

The Dairy Margin Coverage Program (DMC) is a federal safety net program for dairy producers administered by USDA-FSA. The One Big Beautiful Bill Act (OBBBA) reinstated DMC for 2026-2031. Secretary Rollins announced on Tuesday, January 13, that the 2026 enrollment period has now opened and will close on February 26, 2026. Producers can enroll with their local FSA office and are encouraged to call ahead to schedule an appointment and confirm the required paperwork. 

The DMC program protects dairy producers from declines in the milk price and increases in feed prices. It is based on a national margin, the Actual Dairy Production Margin, which is calculated monthly as the difference between the all-milk price and a representative feed cost, which includes corn, soybean meal, and premium alfalfa hay. 

At sign-up, producers will be required to (1) pay a $100 fee with additional premiums payable later in the year, (2) select a coverage level, ranging from $4.00/cwt to $9.50/cwt, and (3) establish a milk production history and determine the percentage of milk to cover. The coverage level selection will determine any additional premiums and serve as the basis for any payments. The associated premiums for the coverage level selections are shown in the table below. You will also need to establish production history and determine the percentage of milk to cover, ranging from 5%-95% of your production. All dairy operations will need to establish a new production history for 2026, which is based on the highest milk marketings from 2021, 2022, or 2023 for farms operating prior to January 1, 2023. For farms starting after January 1, 2023, the first year of milk marketing will be used to establish a production history.

The OBBBA increased Tier 1 allowance to 6 million pounds of milk. Previously, 5 million pounds of milk could be covered under the lower Tier 1 premiums. Any milk covered above 6 million pounds will be covered under Tier 2 premiums. Additionally, with the new OBBBA legislation, you may enroll in the 6-year program duration (2026-2031) and receive a 25% discount on annual premiums; however, you will need to make a one-time decision regarding coverage level. 

We provide an example below for calculating the total cost of enrolling in DMC. Suppose your farm has an established production history of 6,500,000 lbs annually (approximately 275 cow herd based on a 23,500 lbs/cow milk yield). You have decided to enroll for one year. (Note: if the 6-year enrollment was selected, there would be a 25% discount on premiums, but this discount is not offered otherwise.) You will enroll 95% of your established milk production and select a coverage level of $9.50/cwt for Tier 1 and $4.00/cwt for milk covered in Tier 2. Thus, you will have 6,175,000 lbs enrolled, with 6,000,000 lbs enrolled under Tier 1 pricing and 175,000 lbs enrolled under Tier 2 pricing. The total cost is the summation of:

• Admin fee: $100 
• Tier 1: $0.15/cwt for 6,000,000 lbs = $0.15/cwt * 60,000 cwt = $9,000
• Tier 2: $0.00/cwt for 175,000 lbs = $0.00/cwt * 1,750 cwt = $0.00

The total cost for this example farm would be $9,100.

Similarly, it's valuable to understand the mechanics of payments for producers. Payments are received if the national monthly margin falls below the coverage level selected, and producers are paid the difference between these two prices for the milk covered in that month. For example, suppose the monthly margin was $8.72/cwt. Following from the previous example, the producer would receive payment for the milk covered under Tier 1 but not Tier 2 as Tier 2 milk was covered at the $4.00/cwt coverage level, which is below the monthly margin. The payout is calculated as the difference between the margin and coverage level multiplied by the amount of milk covered in that month, as follows:

• ($9.50/cwt - $8.72/cwt) * 60,000 cwt *1/12 = $3,900  

The payment for that given month would be $3,900. 

To understand historical outcomes, we present the figure below showing the monthly margin from January 2019 to November 2025, as well as the maximum coverage level ($9.50/cwt) and minimum coverage level ($4.00/cwt). There were several months (38 of 83 months) during this period in which the monthly margin was below the $9.50/cwt threshold. However, in the most recent years, 2024 and 2025, producers received very limited payments as national margins largely remained above the maximum threshold. 

In 2025, we saw all-milk prices decline from $24.10/cwt in January to under $20.00/cwt by the end of the year. Based on current market expectations, milk prices will continue to decline through the first quarter of 2026, putting additional pressure on margins. Feed prices have been fairly stable as of late. At the time of this writing, based on current price projections, the 2026 average margin is expected to be $8.84/cwt, indicating expectations for payouts for producers enrolled at coverage levels above that threshold. 

As you consider your decisions for DMC enrollment, the USDA offers a decision support tool to assist with the decision-making process. The tool can be found at DMC Decision Tool, and you can enter your historic milk production and adjust the coverage levels and milk production coverage percentage to see your expected premium. The tool also uses current data to forecast expected prices (milk and feed prices) to determine the expected monthly margin and the associated net benefits based on enrollment decisions. While these price expectations are not binding, they provide some insight and may assist in determining enrollment. 

For any questions, please feel free to contact Becca Weir (rbw5600@psu.edu or 814-865-2652), J. Craig Williams (jcw17@psu.edu or 570-433-8943), or your local FSA office.