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Pandemic highlights shortfalls within DMC

A recent analysis by the American Farm Bureau finds the Dairy Margin Coverage Program has not benefited farmers with negative producer price differentials.

Ag economist Michael Nepveux tells Brownfield farmers did receive payments in March, April and May when margins fell below at least $9.50, but in June record cheese prices caught up with the pricing system.

“In this multiple component pricing, you’re seeing a lot of companies de-pooling their milk and not having that ability to pay into the pool, so you’re seeing what’s called negative producer price differentials, which is essentially a line item in a milk check taking out money.”

He says so far, dairy farmers in Wisconsin and Minnesota have received the most DMC payments in 2020 unlike California, which has more milk enrolled in the program.

“With Wisconsin and Minnesota, a lot of those payouts were for milk that was enrolled at tier 1, the first five million pounds of milk, probably covered around $9.50.”

Nepveux says the lack of margin payments in June and July have not accurately reflected financial difficulties following negative PPDs.  While no one could have predicted a global pandemic, Nepveux says the shortfalls in either program need to be addressed to better support the needs of farmers.

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