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1 1 (January 29, 2025)

handle is hein.crs/goveshn0001 and id is 1 raw text is: Updated January 29, 2025 Farm Bill Primer: Support for the Dairy Industry The Dairy Margin Coverage (DMC) program was enacted in the 2018 farm bill (P.L. 115-334, §1401) to support milk producers. It replaces the 2014 farm bill's Margin Protection Program (P.L. 113-79, §1403). Prior to 2014, the U.S. Department of Agriculture (USDA) purchased dairy products to support milk prices. Many dairy stakeholders believed the buying of products failed to provide adequate support for producers. Congress created DMC to allow milk producers to select a guaranteed margin-the difference between the USDA national all milk price and a calculated feed cost-that covers their milk production history. The Further Continuing Appropriations and Other Extensions Act, 2024 (P.L. 118-22, §102), extended DMC through December 2024, and the American Relief Act, 2025 (P.L. 118-158, §4101), extended DMC through December 2025. Milk producers may request that Congress, as it considers farm bill reauthorization, amend DMC or other dairy programs that cover producers who are often subject to volatile market prices for milk and feed. Dairy Marg n Coverage B a sc DMC allows participating milk producers to buy a guaranteed margin for their milk production. For example, if the margin-all milk price minus feed cost-amounted to $9.00 per hundredweight (cwt; 100 pounds) of milk for a month, producers who selected $9.50 margin coverage would receive a $0.50 per cwt DMC payment on covered production. Under DMC, producers may select margin coverage from $4.00 per cwt up to $9.50 per cwt for annual milk production of 5 million pounds or less (Tier I). For milk production over 5 million pounds (Tier II), the margin coverage tops out at $8.00 per cwt. The $4.00 margin, or catastrophic coverage, is free for all participating milk producers. For margin coverage above $4.00, producers pay increasing premium rates as specified in statute (Table 1). A participating milk producer must have an established production history-based on the highest milk marketings (milk sold) in 2011, 2012, or 2013-with USDA's Farm Service Agency (FSA) and pay an annual administrative fee of $100. The fee is waived for beginning, limited resource, socially disadvantaged, or veteran producers. Each year, dairy producers participating in DMC choose a margin coverage level and the share of their milk production history to cover-from 5% to 95%-and receive DMC payments for months in which the margin coverage is triggered. The total premium amount that producers pay for margin coverage above $4.00 per cwt is a product of the margin level premium that is set in statute and the share of production history that the producer selects. Table I. DMC Premium Rates, $ per cwt . Tier I Tier II Margin < 5 million lbs. > 5 million lbs. $4.00 $0 $0 $4.50 $0.0025 $0.0025 $5.00 $0.005 $0.005 $5.50 $0.030 $0.100 $6.00 $0.050 $0.310 $6.50 $0.070 $0.650 $7.00 $0.080 $1.107 $7.50 $0.090 $1.413 $8.00 $0.100 $1.813 $8.50 $0.105 NA $9.00 $0.110 NA $9.50 $0.150 NA Source: Agricultural Improvement Act of 2018 ( I I ). FSA calculates and reports the DMC milk-feed margin each month (Figure 1). If margin payments were triggered, producers would be paid for a month of covered milk production history. Payments under DMC are subject to sequestration reductions of 5.7% in 2021-2025. Figure I. DMC Milk Price-Feed Cost Margins, 2019- 2024, $ per cwt $16 $15 $14 $13 sn $10 $9 $6 $5 $4 $3 $2 $1 -00 -o4-0 0 0 04 0 A 0 -Actual Margin $4 Margin $9.50 Margin Source: CRS from USDA, Farm Service Agency (FSA) data. Notes: Actual margins below insured margin coverage result in payments to producers. cwt = hundredweight, 100 pounds. Between the January 2019 implementation of the DMC program and December 2024, margin payments have been triggered in 38 months for producers who opted for a $9.50 margin. Producers selecting margin coverage under $9.50 have received payments in some of those months, particularly in 2021 and 2023. Payments on the $4.00 catastrophic margin triggered in June and July 2023 for the first time under DMC. Excluding 2020, on average, 71% of dairies with established production history participated in DMC, and

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