FARE Blog

Food, Agriculture, and Resource Economics

Changes to the Dairy Margin Protection Program in the Bipartisan Budget Act of 2018

by Levi A. Russell

The Bipartisan Budget Act of 2018 made some significant changes to the Margin Protection Program for dairy producers. These changes apply beginning with the 2018 calendar year and make the program more producer-friendly and substantially decrease premiums for Tier I coverage. The specific changes are as follows:

 

-Dairy-MPP now operates on a monthly basis. Feed costs, milk prices, the margin, and payments are all calculated or paid monthly. There are no additional changes to any of the formulas to compute these costs, prices, margins, and payments.

-The 2018 election year is extended by at least 90 days after the enactment of the Bipartisan Budget Act of 2018 (February 9, 2018)

-Limited resource, beginning, veteran, and socially disadvantaged farmers are exempt from the administrative fee associated with Dairy-MPP

-The base production history is maintained

-Tier I premiums now apply to the first 5,000,000 pounds of production instead of the previous 4,000,000. Tier II covers production in excess of 5,000,000 pounds

-Premiums for Tier II are unchanged. Premiums for Tier 1 are lowered as follows:

Coverage Level Old Premium New Premium
$4.00 None None
$4.50 $0.010 None
$5.00 $0.025 None
$5.50 $0.040 $0.009
$6.00 $0.055 $0.016
$6.50 $0.090 $0.040
$7.00 $0.217 $0.063
$7.50 $0.300 $0.087
$8.00 $0.475 $0.142

Sources:
Bipartisan Budget Act of 2018

7 USC Chapter 115, Subchapter III, Part A