Supplemental Dairy Margin Coverage
Program Funding
Annual program obligations reported to SAM.gov.
Program Objective
Supplemental Dairy Margin Coverage (Supplemental DMC) is a program enhancement to Dairy Margin Coverage which allows small and mid-size dairy operations the opportunity to establish a supplemental production history in addition to an already established production history. By increasing the dairy operations production history through supplemental, will allow the dairy operation to cover a higher percentage of their milk production and marketing risks. DMC offers a protection plan which provides payments to dairy operations when the difference between the all-milk price and the average feed cost fall below a certain, producer selected, dollar amount. Producers will be eligible for a basic level of margin protection for a small administrative fee and be able to purchase higher coverage with a fee.
Eligibility
Eligible Applicants
- Unrestricted by Entity Type
- Unrestricted by Individual Type
How to Apply
Award Procedure
An eligible dairy operation must complete and submit a contract; agree with all terms and conditions in the contract; comply with instructions issued by or for CCC; provide proof of milk production commercially marketed by all persons in the dairy operation; and provide any other supporting documentation to any county FSA office. Producers must certify to accuracy and truthfulness of the information in their contracts and supporting documentation.
Decision Timeline
- Approval: From 1 to 15 days
- Renewal interval: > 180 Days
Program details & compliance
Description
The SDMC Program, administered by the Farm Service Agency (FSA), is a voluntary risk management tool that allowed participating dairy producers to increase their covered production history if they increased milk production levels from their prior established production history and then could cover that additional history through SDMC. It offers financial assistance when the margin between the all-milk price and average feed cost falls below a coverage level chosen by the producer.
Mission Categories
Primary: Production and Operation
Use of Funds
Allowed Uses
Milk is produced in all 50 states and the maintenance and expansion of existing markets for dairy are vital to the welfare of milk producers in the United States (U.S.). The dairy industry has experienced dramatic structural changes at all levels of the marketing channel that have directly affected milk prices, dairy product sales, farm incomes, and other direct aspects of dairy profitability and volatility. Low margins have been a producer complaint for some time. In addition, low prices, high production costs, and oversupply have been issues for the dairy industry in recent years. To address these concerns, DMC was included in P.L. 115-334 to replace existing dairy price and income support programs. For supplemental DMC, P.L. 116-260 was implemented provisions of supplemental DMC and expand production history for eligible dairy operations. The DMC program is much like an insurance program in that the dairy operation selects a level of coverage, and pays a premium based on the amount of coverage (and an administrative fee). As is customary with other insurance or insurance-like programs both agricultural and otherwise, the regulations only provide for coverage prospectively and contemplated that a party's level of coverage will remain unchanged unless during a designated enrollment period the party makes a different election. The amount of coverage chosen by producers in a participating dairy operation requires two selections. One is the margin trigger and the second is the amount of milk covered (which is based on a history of production).
Required Documentation
To participate in Supplemental DMC, the dairy operation must be a DMC participant and have an existing production history on file with FSA of less than 5,000,000 pounds to establish a supplemental history. To participate in the DMC program, an eligible dairy operation must have a production history determined for the dairy operation; register to participate during a signup announced by the Farm Service Agency (FSA); pay a $100.00 administrative fee annually during the duration of the DMC-Dairy program. An exemption of the administrative fee is applicable for those eligible that include limited resource, socially disadvantaged, beginning, and veteran farmer. Participants will select a coverage level from $4.00 to $9.50 cwt, in $.50 increments, for dairy operations of more than 5 million pounds. Additionally, if applicable will select a coverage at the Tier 2 level if they selected a Tier 1 coverage of $8.50, $9.00, and $9.50. Additionally, the dairy operation will select a coverage percentage of dairy operations production history and supplemental production history ranging from 5 percent to 95 percent. For 2019, participating dairy operations have the option to lock-in coverage levels until 2023 and receive a 25 percent discount in their premium fees. For an existing dairy operation FSA will determine the production history from the highest of the 2011, 2012, and 2013 calendar years. For a new dairy operation ( in operation less than one year), FSA will determine the production history by either the volume of the actual milk marketing for the months the participating dairy operation has been in operation extrapolated to a yearly amount or an estimate of the actual milk marketing of the participating dairy operation based on the herd size of the participating dairy operation relative to the national rolling herd average data published by USDA. For a dairy operation that started commercially producing milk on or after January 1, 2014 but on or before January 1 of the previous year, the dairy operation will select the total milk marketings for one year to determine a production history. All dairy operations in the U.S. shall be eligible to participate in the DMC program to receive margin protection payments. A dairy operation must produce milk from cows in the U.S. and must be commercially marketing milk produced at the time of enrollment and continue to market milk for the duration of the program.