In the 2014 Farm Bill a number of changes occurred in regards to government support programs. Several regionally focused programs were replaced with a single program entitled the Dairy Margin Protection Program (MPP). This program essentially required farmers to pay a sort of service fee and when the spread between feed and “all milk price” went below $4 there were payments made to farmers. There was a premium option, with a higher fee, that increased the spread value to anything below $8. However, the payouts to this program in 2015 were small and, as a result, enrollment in the program decreased tremendously from 2016 to the present. With MPP yielding so little benefit to the dairy industry, there is great interest in the upcoming farm bill to see a program with increased probability of payment.
In addition, with milk prices continuing to drop and production even increasing slightly there is a challenge for producers to stay in business during this time of low prices. The volume of discussion about budgetary allotments to the various support programs will likely rise as time progresses. During the next year, as this bill is discussed, it is important that dairy producers remain informed and aware of what they can do to be involved and have a voice in the matter.
Preston Lyman is a Research Analyst with Decision Innovation Solutions (DIS). DIS is an Iowa-Based economic research firm which provides regular farm economics research and analysis to the Iowa Farm Bureau staff and members.