Margin Protection Program Improvements

VAAFM Secretary Anson Tebbetts speaks at a press conference with US Senator Patrick Leahy in Burlington recently.

By Anson Tebbetts - Secretary / Agency of Agriculture

I was delighted to attend a press conference recently where Vermont Senator Leahy announced he has secured significant improvements to a key dairy safety net program.  Senator Leahy is a leading member of the Senate Agriculture Committee, where he has long led on dairy policy issues.  Here is the information the Senator’s office shared at the press conference.

The bipartisan agreement makes substantial improvements to the Margin Protection Program (MPP) for dairy farmers, and it would take effect immediately upon becoming law.  Effective for calendar year 2018, the changes would direct the U.S. Secretary of Agriculture to reopen the signup period for the MPP and offer farmers an important new chance to select meaningful levels of risk protection at more affordable rates.  For some family dairy farms, protection costs could drop by 70 percent or more.

To further improve the effectiveness of the MPP, the Leahy-authored proposal will also provide that the program-backed benefit is calculated monthly, rather than averaged every two months. This will make the program more responsive to farms that must meet important monthly financial requirements

The dairy proposal also benefits dairy farmers and livestock producers by repealing a cap on subsidies and operating costs for livestock insurance policies.  This $20 million statutory annual limit has severely restricted dairy farmers’ access to the Livestock Gross Margin for dairy and has prevented companies from developing new, innovative insurance products.

The Leahy-led dairy provisions make six specific changes:

  • Directs the Secretary of Agriculture to immediately re-open the sign-up period for calendar year 2018 for the Margin Protection Program (MPP) to allow farmers to reevaluate the costs and protections the program can now provide their farm.
  • Immediately moves the MPP calculations and potential payments to a monthly basis (currently bimonthly) to improve the accuracy and timeliness for helping farmers.
  • Immediately cuts the premium costs for Tier I enrollment by nearly 70 percent to incentivize producer participation at meaningful levels of protection and makes that change this year.
  • Raises the Tier I threshold level corresponding to substantially lower premium costs to the first 5 million pounds of production (nationally equivalent to 220 cows), up from the current level of 4 million pounds of production (nationally equivalent to 175 cows). This will better align the program with the median U.S. dairy farm size, 223 cows, and encourage more family farms to participate and secure meaningful levels of protection to offer an effective farm safety net.
  • Repeals the unfair statutory cap for the USDA’s underwriting costs for livestock insurance products.

*Information from the Office of U.S. Senator Patrick Leahy.