Frequently Asked Questions

Agricultural Risk Coverage and Price Loss Coverage- Frequently Asked Questions

What programs are available under the 2018 farm bill for commodity programs?

Answer: Similar to the 2014 Farm Bill, producers have the same three options for federal commodity programs: Agricultural Risk Coverage and Price Loss Coverage. Agricultural Risk Coverage is again divided up into a county and individual option for the 2018 Farm Bill. If producers are enrolled in Price Loss Coverage then they may also have the opportunity to participate in the Supplemental Coverage Option under the Federal Crop Insurance Program.

What is the Agricultural risk coverage-County under the 2018 Farm bill? 

Answer- The ARC-CO program provides revenue loss coverage at the county level. ARC-CO payments are issued when the actual county crop revenue (current year county yield multiplied by the national marketing year price) of a covered commodity is less than the ARC-CO guarantee (5 year Olympic average county yields multiplied by 5 year Olympic average of the higher of the national marketing year price or the effective price for the covered commodity and the product reduced by 86%). The 5 year Olympic average has a 1 year lag- Program year 2019 would use the five years of 2013-2017. Source USDA Farm Service Agency https://www.fsa.usda.gov/programsand-services/arcplc_program/index 

What is Agricultural Risk Coverage-Individual under the 2018 Farm Bill? 

Answer- Similar to the 2014 Farm Bill ARC-IC is available for producers to enroll all the base acres on their farm under one commodity program. The individual option of ARC is also a revenue program, but instead of county yields- it is the yields of the individuals planted acres that get used to calculate a payment. A weighted payment is made on base acres not planted acres. Another difference from the county version of ARC is that payments are only made on 65% of the farms base acres not 85%.

What is the Difference in ARC-IC and ARC-CO? 

Answer- Both programs are revenue based programs that trigger payments when current year revenue (price times yield) falls below a historical benchmark. ARC-CO uses the county average yields to calculate both current year revenue and historical benchmark whereas ARC- IC uses the farms individual yields to calculate potential payments. Another big difference in the two programs is that because county yields tend to be less volatile payments are made on 85% of the farms base acres whereas ARC-IC is on 65% of the farms base acres. Additionally, producers who elect ARC-CO have the option to only enroll a portion of their crops in ARC-CO and enroll the others in PLC. If a producer elects ARC-IC- it is for all base acres on the farm and the producer cannot elect PLC for certain commodities.

What data sources are used to calculate ARC-CO yields and Prices? 

Answer- This is a change from the 2014 Farm Bill where National Agricultural Statistics yield surveys were used as the primary data source for both current year and historical benchmarks. In the 2018 farm bill- Risk Management Agency Yields will be used as the primary source. If a year is missing from the data set the next level of data is National Agricultural Statistic Service Yields, then the State Average, then the National Average Yield. Prices are calculated by the Farm Service Agency using Agricultural Marketing Service and National Agricultural Statistics Marketing Year Average (MYA) prices. The MYA are prices are calculated by weighting prices throughout the year by the amount of grain sold at that price. If the MYA price falls below the fixed reference price for a commodity, the reference price is substituted in to the historical benchmark calculation.

What is Price loss coverage

Answer- The PLC program payments are issued when the effective price of a covered commodity is less than the respective reference price for that commodity. The effective price equals the higher of the market year average price (MYA) or the national average loan rate for the covered commodity. Source- USDA Farm Service Agency https://www.fsa.usda.gov/programs-and-services/arcplc_program/index

Should I update my Price loss coverage Yields? 

Answer- This is up to the landowner of the FSA farm or a producer that has Power of Attorney for that landowner. All landowners must agree to update a farms PLC yields. The 2018 Farm Bill give producers to update PLC for the lifetime of the 2018 Farm Bill and for any programs that come after the sunset period of the 2014 Farm Bill. Higher yields mean higher payments if PLC payments are triggered and so it is generally to the producer and landowners benefit to update PLC yields when given the change. They do not have to however. The Farm Service Agency will be sending a notice to all landowners with the current PLC yield listed. Starting Oct 1, 2019 and running through Sept. 31, 2020- producers have the option to update their yields. A decision tool is available in the decision tool section for producers to see fi their new yield is higher than their existing PLC yield. The calculation for the 2018 update is based on a simple average of 2013-2017 yields time 90% de-trended to be comparable to the national yields of 2008-2012.  Plug years can also be used in 2013- 2017 to erase bad years. A plug yields are equal to 75% of the county average from 2013-2017. It is expected that if a producer updated yields in 2014 that he or she will not find the 2018 yield update favorable, but is still worth checking. Farmers will need to proof their yields, if they get audited. Crop insurance records are preferred as they are already accredited proof of yields. Even if a farmer does not sign up for PLC, updating PLC yields for future Farm Bill program need to be considered.

All of my acres were prevented planting acres in 2019. Should I consider the ARC-IC program? 

Answer- If all of your acres were prevented planting acres in 2019, you might want to consider this election. Keep in mind, ALL acres must have been prevented plant and that election is for two years (2019 and 2020). The choice of two years of ARC-IC needs to be considered against 2 years of PLC or ARC-CO.

What is the statutory Reference price? 

Answer- Established in the 2014 Farm Bill and retained in the 2018 Farm Bill are reference prices for each commodity. They prices were congressionally set based on historical prices. Corn is set at $3.70, Soybeans at $8.40 and Wheat at $5.50. If the national Marketing year Average Price falls below these values a PLC payment is triggered. Reference prices are also substituted into the historical revenue benchmark calculations in the ARC-CO program when historical year prices are below the reference price. A list of all reference prices can be found here: https://www.ers.usda.gov/topics/farm-economy/farm-commodity-policy/crop-commodity-program-provisions-title-i/

Does the Effective Reference Price ever change? 

Answer- New in the 2018 Farm Bill is the possibility that the reference prices for commodities can increase above what is congressionally set. Current reference prices are $3.70 for corn, $8.40 for soybeans and $5.50 for wheat. The higher the reference price the higher the likelihood that the PLC program triggers. Reference prices can be increased if the five year moving Olympic average for a commodity multiplied by 85% is greater than the current reference price. As of right now- prices will have to increase for 85% of historical prices to be above the current reference prices. Although then prices will be high to not trigger a PLC payment. The effective reference price is also maxed out at 115% of the current reference price.

What is the Marketing Year Average (MYA) Price and how is it calculated? 

Answer- the National Marketing Year Average (MYA) price is the price that represents what the average price the commodity sold for on average during the year. Marketing years are associated with their respective commodity based on when they are harvested and the directly following year. For instance: corn and soybeans both have a marketing year that runs September 1 through August 31 of the following year. Wheat runs June 1 through May 31 of the following year. The national marketing price each month is multiplied by the weighted amount of the percent of the annual crop that was marketed during the respective month and then added up to become the national marketing year average price. The MYA prices are not known until the season finishes and thus the reason that ARC and PLC payments aren’t paid until a year after the harvest of the crop.  Wheat is usually front end loaded for two or three months after harvest, whereas beans are usually front end loaded for the first five or six months.

My county is one that has irrigated and no-irrigated yields established. What is the impact on those differences? 

Not new for the country but new to Ohio is the possibility of having irrigated and non-irrigated yields in certain counties. Payment rates for ARC will be calculated for irrigated and non-irrigated in the county.  If a farm does have irrigated or non-irrigated crops then a weighted distribution of irrigated and non-irrigated acres is applied to the associated payment rates to create a blended rate. For Ohio- counties with corn irrigated values are Champaign, Pickaway, Ross and Williams. For Ohio- Counties with irrigated values are Allen, Auglaize, Champaign, Hardin, Putnam, Seneca, Shelby, Union, Van Wert, Williams, and Wyandot. Counties were selected based on one of two criteria: RMA data was available and recorded for irrigated acreage in 3 of the years between 2013 or 2017 or FSA data noted that at least 10% of county was irrigated and non-irrigated between 2013 and 2017 and that there was at least 5,000 acres planted in the county ever year.

Why does Lucas County have two payment rates?

Answer- 25 counties across the country are split into two administrative unites based on the amount of acres in the county and the demographic difference between two sides of the country. Lucas county is the only county in Ohio that meets this definition and is broken up into East Lucas and West Lucas.

Is it true that the ARC or PLC program I choose will be the same for 2019 and 2020? 

Answer- yes the decision producers make in 2019 will be the same decision for two program years 2019 and 2020. However, while the election is the same, the enrollment period is not. Producers can enroll in the federal commodity programs at the their local office for 2019 starting September 3, 2019 through March 15, 2020. Producers can sign up for the 2020 program October 1, 2019 through June 30, 2020. Producers need to elect before March 15, 2020 and if not then they forfeit their potential 2019 ARC and PLC payment and their decision for 2020 reverts to the decision they had during the 2014 Farm Bill. Changes to the farm operation can still be adjusted at FSA for the 2020 program up to June 30, 2020. Annual decisions will start in 2021 and go through 2022 and 2023.

What is an olympic Average?

Answer- An Olympic average is where you drop the lowest value and the highest value and average the remaining values. For instance: if a yield history had 35, 42, 45, 45, and 57- 35 and 57 would both be dropped and 42, 45, and 45 would be added up and divided by 3 to get the Olympic average. This is also a moving average, meaning that the average will move up one year when changing program years. Program Year 2019 will use 2013-2017 while Program Year 2020 will use 2014-2018. This term has ties to when Olympic judges were removed from scoring Olympic figure skaters for either really high or low scores.

 

ARC and PLC Farm Record Questions

Are payments based on the location of my administrative county through the farm service agency or the physical location of my fields? 

Answer- New in the administration of the 2018 Farm Bill is that payments will be based on the physical location of the fields not the FSA administrative county. In the 2014 version farms were likely to switch their administrative county from a county with a lower payment to one with a higher payment. This adjustment weights the historical benchmark, the guarantee and the current year revenue by the percent of acres in each county and recalculated a payment rate for all base acres enrolled on the farm. A farm that has acres in three counties will have the same payment rate for all base acres weighted based on benchmark, guarantee and current year revenue in those three counties.

Is there a base acre update/reallocation similar to the 2014 farm Bill? 

Answer: No, farmers were offered a one-time opportunity to update base acres under the 2014 Farm Bill. Most producers updated base acres if it meant moving to a higher paying commodity under ARC or PLC. If a piece of land didn't have base before, it still doens't have base. 

Will base acres be suspended if not planted to a covered commodity in the 2018 farm bill? 

Answer- Base acres that have been planted to grass, idled or pastured and with no base on the farm planted to a covered commodity between 2009-2017 will be suspended from participating in ARC or PLC, but still maintain historical base for future potential farm bill programs. Acres that qualify will be eligible for the Conservation Stewardship Program Grasslands Program and receive $18/acre throughout the lifetime of the 2018 Farm Bill. Suspended acres will be considered planted to a program crop during this time and be eligible for future legislation.

Can payment yields be updated? 

Answer- This is up to the landowner of the FSA farm or a producer that has Power of Attorney for that landowner. All landowners must agree to update a farms PLC yields. The 2018 Farm Bill give producers to update PLC for the lifetime of the 2018 Farm Bill and for any programs that come after the sunset period of the 2014 Farm Bill. Higher yields mean higher payments if PLC payments are triggered and so it is generally to the producer and landowners benefit to update PLC yields when given the change. They do not have to however. The Farm Service Agency will be sending a notice to all landowners with the current PLC yield listed. Starting Oct 1, 2019 and running through Sept. 31, 2020- producers have the option to update their yields. A decision tool is available in the decision tool section for producers to see fi their new yield is higher than their existing PLC yield. The calculation for the 2018 update is based on a simple average of 2013-2017 yields time 90% de-trended to be comparable to the national yields of 2008-2012.  Plug years can also be used in 2013- 2017 to erase bad years. A plug yields are equal to 75% of the county average from 2013-2017. It is expected that if a producer updated yields in 2014 that he or she will not find the 2018 yield update favorable, but is still worth checking. Farmers will need to proof their yields, if they get audited. Crop insurance records are preferred as they are already accredited proof of yields. Even if a farmer does not sign up for PLC, updating PLC yields for future Farm Bill program need to be considered.

 

ARC and PLC Payment Limitation Questions

What are teh payment limitations under the 2018 farm bill for commodity programs? 

Answer- ARC and PLC programs are subject to a $125,000 payment limitation. This limitation will include all payments received directly or indirectly for all covered commodities expect peanuts. Different from the 2014 Farm Bill is that this payment limitation is now separated from any benefits received from the Marketing Assistance Loans or the Loan Deficiency Payments. Different from the Market Facilitation Program Payment that were administered to aid in a drop in commodity prices from retaliatory tariffs- the ARC and PLC has no exemption from the Adjusted Gross Income limit of $900,000 that was applied to the 2018 and 2019 MFP program if 75% of a person AGI came from farming or ranching actives.

What does the 10% cap on ARC-CO mean? 

The maximum payment allowed to a producer under the ARC program (both individual and county) is 10% of the benchmark revenue. For example a 5 year Olympic average price of $3.70 and a 5-year Olympic average yield of 150 would have a benchmark revenue of $555.00. The 10% cap is the maximum payment that can be received and in this case would be ($555.00 x 0.10) = $55.50

 

ARC/ PLC Enrollment and Key Dates

If a producer does not sign-up for a commodity program in 2019, what happens?

Answer- If a producer does not sign up for the 2019 commodity programs, he or she will forfeit any 2019 payment made under the programs and the decision between ARC or PLC will revert to the decision he or she made during the 2014 Farm Bill for Program year 2020. Starting in 2021 the producer can elect a different option if he or she chooses.

Do I have to go to my FSA office to make the 2020 ARC/PLC selection? 

Answer- Producers will have the same commodity program election in 2020 as in 2019, but producer will need to enroll in the federal commodity program starting October 1, 2019 and running through June 30, 2020.

What are the FArm Bill Enrollment Dates? 

Answer- 2019 Enrollment: September 3, 2019- March 15, 2020;  2020 Enrollment: October 1, 2019- June 30, 2020;  2021 Enrollment: October 1, 2020- March 15, 2021; 2022 Enrollment: October 1, 2021- March 15, 2022; 2023 Enrollment: October 1, 2022- March 15, 2023

Does the landlord or the tenant make the decisions on the program? 

Answer- The ARC and PLC decision for the farm is for any person that has risk in the operation, which could include a crop share landlord and the tenant. If the lease agreement is a cash rent lease, then it is the tenant’s decision to elect commodity program (even if the tenant changes in 2020). If multiple people hold risk in the operation then all individuals must agree on a program election. If an agreement cannot be made then the decision reverts back to what the farm was enrolled in for the 2014 Farm Bill and the farm forfeits any payments earned in 2019. As for the Yield Update for PLC yields- this is the landowners decision or if the tenant has Power of Attorney for the Landowner. FSA will send a form to the landowner notifying him or her of the yields currently associated with the farm. Payment yields updates can be estimated using the payment yield update tool in the decision tool section. Verifiable records like crop insurance yields will need to be used in the case the farm gets audited.

Is there any reason to sign-up early for ARC/PLC?

Answer- It depends. Producers can sign up for the 2019 program starting September 3, 2019 and the 2020 program starting October 1, 2020. If a producer wants to get the decision out of the way or done when he or she is in the FSA office signing up for the 2019 Market Facilitation Program then there might be some benefit. He or she can adjust that decision all the way up to the end of the enrollment period. Given the troublesome planting season this year, it could be beneficial to see what 2019 yields and prices look like in December and January before making the 2019 and 2020 election. It is important to not wait till the last minute as FSA office do fill up fast.

If payments are made, when can i expect them to arrive to me? 

Answer- Because both ARC and PLC rely on the marketing year average price to calculate payments the marketing year has to be complete before payments can be released. Corn and soybean marketing year is September 1 through August 31 of the following year and so payments for ARC and PLC if triggered are paid out in October of the following year. Example 2019 payments will be made in October 2020. The payments made or not made in October of 2019 are associated with the final year of the 2014 Farm Bill, which was program year 2018.

Once a producer sings up under ARC or PLC can he or she change their decision? 

Answer- The decision between ARC and PLC will be the same decision for both 2019 and 2020. However, starting in 2021 and including years 2022 and 2023 a producer can elect a new decision between October 1 and March 15 of the following year if he or she chooses. The producer does not have to elect a new program if he or she chooses not to as the decision will stay the same as the year prior. The option to purchase Supplemental Coverage Option on top of a crop insurance policy is an annual decision made at the time of crop insurance purchase.

Does every landowner have to sign off on the PLC Yield Update? 

Answer- No, only one landowner has to sign. 

Does every producer have to sign to enroll in ARC-CO, ARC-IC or Plc? 

Answer- Yes, Any producer with an interest in teh production has to sign up. Producers that have Power of Attorney on file at FSA for a landowner or fellow producer can sign for them. 

Decision Tool

How do I access the decision tool ARC and PLC? 

Answer- Decision Tools will be available shortly as soon as the Farm Service Agency releases county yield information.

Which farm program should I choose? 

Answer- this will vary based on location and producer. Risk preferences should be taken into account when making a selection. In the previous farm bill most producers chose the program that was going to pay them the most money over the lifetime of the farm bill and ARC-CO paid in the first couple of years with no or little payments in the back years. PLC on the other hand paid in the back years for corn and never triggered for soybeans. Many farmers were financially strapped in some of the back years when PLC was making payments. Remember that the ARC programs help transition from periods of high revenue to low revenue. Revenue has to continue to decline for the program to keep making payments because of the 86% benchmark. Conversely PLC makes payments when the Marketing Average Price falls below a benchmark. If the prices stays below the benchmark all five years a payment will be triggered all five years. Both programs are considered shallow loss programs because of the camps to PLC rates being the difference between the reference price and the marketing loan rate and ARC payments are capped at 10% of the historical benchmark. An understanding of county yields and paying attention for market forecasts will help make decisions a little easier for producers. Articles about market forecasts are made available on the OSU Farm Management Page https://aede.osu.edu/research/osu-farm-management

Crop Insurance

What changes were made to crop insurance? 

Answer: There were few changes in Title 11 of the Farm Bill. However, a couple changes that likely will have interest include: Enterprise units are now allowed across county lines, cover crops to be included in the definition of good farming practices for crop insurance coverage, and data changes to allow earlier estimates of ARC program payments using RMA yield data.

What is the supplemental coverage option?

The Supplemental Coverage Option (SCO) is designed to allow higher coverage on crop insurance policies up to 86% on top of a yield or revenue individual policy. Area policies are not eligible underlying policies although SCO is based on area revenue and yields to make payments.  Example a producer with a 60% insurance policy for Revenue Protection can buy SCO and get 86% insurance coverage: 60% percent based on the individual policy and the remaining 26% based on historical and current area revenue.  SCO can be purchased through your crop insurance agent. However, producers must meet all the eligibility requirements of the Federal Crop Insurance Corporation for underlying policies. Producer who elect ARC- CO or ARC-IC are ineligible for SCO coverage. Example: a farmer selects ARC-CO for soybeans and PLC for corn, he or she can still purchase SCO for corn even though the soybeans was in ARC-CO. If ARC-IC was selected the producer would be ineligible because all commodities on the farm have to be covered under ARC-IC SCO is paid out on planted acres similar to the underlying policy, but PLC would pay on base acres.

How will SCO be treated in 2019 since enrollment was delayed for ARC/PLC? 

Answer:  Producers will have a chance to cancel their SCO policies by March 15, 2019. This allows producers, particularly those who intend to elect ARC for all their acres, to no longer incur crop insurance costs for coverage in which they will not be eligible. Second, producers will now have the option to file an ARC/PLC acreage intention report on their acreage reporting date or if their acreage reporting date has already passed by March 15, 2019. The number of eligible acres on Farms with an intention of PLC will be the number of acres insured for SCO regardless of any actual elections made with FSA. If the producer does not file an ARC/PLC acreage intention report, then SCO will cover all acres as though the producer elected PLC. Last, the existing penalties for misreporting eligible acreage on the SCO endorsement, will not apply in 2019. – Source USDA- Risk Management Agency https://www.rma.usda.gov/en/News-Room/Frequently-Asked-Questions/Agriculture-Risk-Coverage---Price-Loss-Coverage-SCO

When can i buy supplemental coverage option for spring planted crops?

Answer- If you choose to buy a SCO policy along with your underlying crop insurance product, you must do so before the sales date for crop insurance closes. (Corn and Soybeans- March 15).  You may file an ARC/PLC acreage intention report by your normal acreage reporting date (Usually July 15) to adjust your insured SCO acre to your current election intentions. Source USDA- Risk Management Agency https://www.rma.usda.gov/en/News-Room/Frequently-Asked-Questions/Agriculture-Risk-Coverage---Price-Loss-Coverage-SCO

If a producer intends to election ARC for one crop, but PLC for another, can he or she still get SCo?

Answer- Yes, you can still get SCO coverage for the acreage that intends to be in PLC. ARC/PLC elections and SCO coverage are all done on a crop-by-crop basis. Each crop will have its own policy and own ARC/PLC acreage intention report as needed. Source USDA- Risk Management Agency  https://www.rma.usda.gov/en/News-Room/Frequently-Asked-Questions/Agriculture-Risk-Coverage---Price-Loss-Coverage-SCO

 

Dairy Margin Coverage Frequently Asked Questions

Program Overview

What is the diary Margin Coverage program

    1. The DMC program offers producers catastrophic coverage at $4.00 at no cost except for a $100 Premium. There are greater coverage levels for various premium costs. A payment is triggered when the difference in the U.S. All Milk Price and a formula of corn, soybean meal, and alfalfa falls below a selected coverage level by the producer.

As a producer what are my choices for DMC? 

    1. Producers must have an established production history with the local FSA office. If they do not have an established history and started milking since January 1, 2019- FSA will help calculate a production history.
    2. The producer must have registered for DMC during the election period of each year. For 2019 this is June 17, 2019 through September 20, 2019.
    3. Pay the $100 administrative fee
    4. Select a coverage level for both Tier 1 and Tier 2 if applicable.
    5. Select the percent of milk production you would like to cover (between 5% and 95%)

Who is eligible to participate in the program? 

    1. U.S. Producers who produce and commercially market milk. Individual producers must be a citizen of the U.S. or a legal resident alien of the U.S. and make contributions including labor, land, management, equipment, or capital to the dairy operation.
    2. Not be associated with a Federal, State or Local Government Agency
    3. Must have commercially marketed milk at the time of DMC enrollment. Exception for 2019 is any operation that milked during any month during the 2019 calendar year is eligible.

What is the difference in multi-producer operations and multi-Dairy opeartions? 

    1. Multi-Producer Operations are operated by more than 1 dairy producers.
    2. Multi-Dairy Operations are Dairy Producers that operate more than 1 dairy operation. 

How is the Margin Calculated?

    1. The margin is the difference between the all U.S. milk price published by USDA National Agricultural Statistics Service (NASS) and a calculated fee price for producing a hundredweight of milk. The feed formula is based on a formula of the national corn price per bushel reported monthly by NASS times 1.0728, the national alfalfa hay price per ton reported monthly by NASS times 0.0137, and the Central Illinois price per ton reported by the Agricultural Marketing Service for soybean meal times 0.00735.

I'm a diary that started milking in 2019, am I eligible for dmc? 

    1. Yes, for 2019 only, the dairy operation that started milking in 2019 is eligible for DMC for the actual days marketing milk.

Can I be enrolled in both the livestock gross Margin-Diary or diary revenue protection and simultaneously be enrolled in dairy margin coverage? 

    1. Yes- the 2018 Farm Bill made it possible for producers to simultaneously be enrolled in multiple programs whereas the 2014 Farm Bill made producers choose.

Dairy Margin Coverage Premium and Indemnities

How is the premium calculated? 

    1. For a dairy operation with 5,000,000 million lbs of milk or 50,000 cwt. and wanting to elect coverage at $9.50 at 95% of their production. The calculation for annual election would be
      1. 50,000 cwt. x 95% = 47,500 cwt
      2. 47,500 x the premium for the $9.50 coverage level ($0.150/cwt.)
      3. 47,500 x $0.15 = $7,125
      4. The premium for one year would be $7,125 plus $100 for enrollment fee.
    2. The calculation for multiyear election would be
      1. 50,000 cwt x 95%= 47,500 cwt
      2. 47,500 x premium of $0.15/cwt at the $9.50 coverage level = $7,125
      3. $7,125 x 75% (100%-25%) for the multi-year discount = $5,343.75
      4. However paid for 5 years = $5,343.75 x 5 years = $25,718.75 plus $100 for enrollment fees each year.

Do I have to pay the administrative fee? 

    1. Yes, you will have to pay the annual $100 administrative fee unless you are classified in one of the following categories: limited resource, beginning farmer or rancher, veteran farmer or rancher, or socially-disadvantaged farmer or rancher.

When does my coverage level pay out? 

    1. The DMC program makes an indemnity payment when the different in the monthly margin is below your chooses coverage level.
      1. Example of a $9.50 coverage level. If the June margin which is the difference of the U.S. all milk price and a feed cost formula of corn, soybean meal, and alfalfa is $8.80 then a 12th of the annual milk production will be multiplied by the difference of the $9.50 and $8.80 or $0.70. So for a producer with 47,500 cwt. of annual milk production history. The indemnity for June would be 47,500 divided by 12 = 3,958 cwt.  That production is then multiplied by the difference of the coverage and the margin of $0.70 to create a $2,770.60 (3,958 x $0.70) payment for the month of June.

Can I pay the 5-Year lock-in premium upfront and not worry about it for the next 5 years? 

    1. No, the producer must come in to the local Farm Service Agency Office annually and pay their premium and administrative fee.  

What happens if I fail to pay my administrative fees or premiums on time? 

    1. Administrative fees are due at the time of enrollment, or by the end of the coverage election period (2019= September 20, 2019) Failure to do so will result in loss of coverage for the year.

Production History Establishment

What is eligible production history?

    1. Eligible production history is that recorded by the local Farm Service Agency Office and sent to the producers via mail. For existing diary operations (those before January 1, 2014) this is the highest annual milk production for 2011, 2012, and 2013. For new dairy operations (those after January 1, 2014) please see questions below.

What date is considered the start of milk marketing? the day the operation started milking or the day the milk was shipped?

    1. The date of Milk Marketing is the date the milk was shipped based on verifiable documentation.

What is my Production History if my dairy operation had marketed milk before January 1, 2014?

It is the highest milk production of the following years: 2011, 2012, and 2013.

What is my production history if my dairy operation had marketed milk a year or more, but was not in opeartion prior to January 1, 2014? 

    1. Any milk marketing production value during one full calendar year.

What is my production history if my dairy operation has been milking for less than a full calendar year? 

    1. There are 2 Options an extrapolation method to get to a full year based on the month of actual milk production or an adjustment in accordance with the national rolling herd average

Are their still "bumps" under the Dairy margin Coverage Program similar to MPP-Dairy? 

    1. No- the last bumped production history under the MPP-Dairy program will be the only bump used for DMC.

 Dairy Margin Coverage Election

What date am i required to enroll my dairy in the dairy margin coverage program if I want to participate? 

    1. In 2019, producers have until September 20, 2019 to enroll in DMC. The date for 2020 has not been determined, but for coverage years 2021, 2022, and 2023 enrolment will be due on September 1 of the previous year.

What is Tier 1 and Tier 2? 

    1. Tier 1 is the quantity of a producers milk production below 5 million pounds. Tier 2 is the quantity of a producers milk production above 5 million pounds. A producer with only 4 million pounds of milk would only have Tier 1 production and a producer with 7 million pounds of milk would have 5 million pounds of milk in Tier 1 and 2 million pounds of milk in Tier 2.

Can i select different coverage levels for Tier 1 and tier 2 production? 

    1. Only if the producer selects a coverage level above $8.00 for Tier 1 can they pick a coverage level that is not the same in Tier 2. A producer that picks a coverage level of $8.00 or below for a coverage level in Tier 1 will have to pick that same coverage level for their Tier 2 production.

Is there a discount for multi-year sign-up? 

    1. Yes, producers will have a 1-time opportunity in the first year of enrollment only to sign-up for a multi-year period through 2023 and receive a 25% discount on their premium. This is only available in the first year of election by the producer.