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The dairy Margin Protection Program is paying for some farmers

An ag economist says some dairy farmers that signed up for the dairy Margin Protection Program should see a return on their investment soon.

Peter Vitaliano with National Milk Producers Federation tells Brownfield the March margin for dairy farmers was one of the lowest it’s been since the insurance program began.  “Things are heading lower so my guess is that when the April margin comes in, it’s going to be lower still.”

He estimates an April margin between $7 and $7.50 which will trigger insurance payments for farmers that signed up for higher margin levels.  “The outlook going forward from the first quarter is let’s say darkening somewhat and the futures are indicating lower milk prices to come.”

Vitaliano says a combination of a very oversupplied world market and increasing milk production is weighing on the futures market. He expects milk power and whey prices to remain depressed domestically as well.  “Those prices are going to remain low for quite some time, probably at least another year because the oversupply situation, particularly from European milk producers, is very, very large and showing no signs of turning around.”

Vitaliano says the butter market is a wild card to watch as increased domestic consumption has softened the blow for U.S. farmers.

AUDIO: Interview with Peter Vitaliano