Changes to the Margin Protection Program for Dairy Producers

Based upon predictions of milk prices in the coming months, the next period of time looks to be even more challenging for our dairy farms than it has been. Recently, Dr. Andy Novakovic from Cornell’s Dyson School of Applied Economics and Management authored a short paper focused on the recent changes to the Margin Protection Program incorporated into the passage of the federal budget bill. Although Andy certainly will not tell a farm what to do or not to do, he indicates that the changes to the program are significant and my take on his comments is that farms should evaluate or re-evaluate their 2018 enrollment decision based upon these changes.

Dr. Tom Overton, Professor of Dairy Management and Director, Cornell CALS PRO-DAIRY
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"I’m sure you’ve all seen reports and summaries of the changes to MPP-Dairy. I have pulled up the actual legislative language to double check how the changes are portrayed and put together this short MPP paper. The changes are short and sweet. I am of course not going to tell anyone what they should or should not do, but the reductions in Tier 1 premiums are considerable and the maximum Tier 1 amount is increased to 5 million lbs. I would think these changes would make it well worth the while of producers to revisit their 2018 enrollment decision. Apparently there is a bit of uncertainty about what exactly USDA will open up and when but the language looks pretty straightforward. Every farmer can make a new decision about 2018, applying from January to December. January is already done and the predictions for the next few months are not hard to make and look fairly grim. The last third or so of 2018 is still expected to show improvement but it doesn’t look all that great either.

If you have any questions or comments, please feel free to share."

Andrew M. Novaković, PhD
The E.V. Baker Professor of Agricultural Economics
Director of Land Grant Programs
Charles H. Dyson School of Applied Economics and Management
Cornell SC Johnson College of Business
College of Agriculture and Life Sciences
Cornell University
451A Warren Hall
Ithaca, New York 14853-7801

Telephone: 607-821-2613
E-mail: a.novakovic@cornell.edu
Skype: CUMilkman
Facsimile: 607-255-9984
URL: www.dyson.cornell.edu
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