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Economist says MPP buy-up not wise in 2017

An economist says the improved price forecast for dairy means producers need to be cautious before adding buy-up coverage under the Margin Protection Program.

David Bullock is a senior economist for AgriBank, and tells Brownfield the improved milk price projections and stable feed costs mean the dairy Margin Protection Program might not be the best plan for every producer in 2017.  He cites a University of Minnesota margin projection tool which shows the MPP is not likely to pay out much if anything for most dairy producers this year.  Bullock says, “As far out as it goes, it’s still showing we’re going to be probably above that eight dollar level, which is that first level of coverage on the dairy margin program so margins should probably be, margin over feed cost should be above that eight dollar level for the most part.”

Bullock says the futures market might make more financial sense than buying MPP coverage that is unlikely to pay out.  He says producers have to look at their operation.

Producers already enrolled in the Margin Protection Program are obligated to maintain catastrophic level coverage through the end of the farm bill.  Producers have the option of buying additional coverage each year.