The recent developments regarding the extension of the 2018 Farm Bill involve its inclusion in a stopgap spending bill. This bill, released by U.S. House Republicans, intends to extend the 2018 Farm Bill through September 30, 2024. This agreement was reached among the top leaders of both the Republican and Democratic parties within the Senate and House Agriculture Committees.
If this extension is successfully passed by Congress, it would ensure the continuation of programs like Agriculture Risk Coverage, Price Loss Coverage, and Dairy Margin Coverage (DMC) for the 2024 crop year. It’s important to note that this extension is not intended as a substitute for passing a comprehensive 5-year Farm Bill. The leaders of the House and Senate Agriculture Committees have expressed their commitment to working together to accomplish this in the following year.
The DMC program’s track record shows consistent payouts during times of tight profit margins. According to USDA Dairy Margin Coverage (DMC) Program Information (figure 1), around 17,041 operations nationally signed up for the DMC program and have received about $1.27 billion in total. Averaging about $74,553 in payments per operation. The DMC program enrollment information details can be reached at https://www.fsa.usda.gov/programs-and-services/dairy-margin-coverage-program/program-enrollment-information/index.
The 2018 farm bill sanctioned the DMC program to safeguard producers when the margin between the overall milk price and the average feed cost dips below the margin elected by the producer.
The DMC statistics for Tier 1 (figure 2) payments per cwt for the year 2023 at coverage level of 95% and 5 million pounds (lbs) of historic production, shows a strong upward trend in payments from January ($1.56/cwt) to June ($5.47/cwt). This has offered much needed support for dairy farmers during this period.
Figure 2.
Since June, margins have slowly been recovering and with it, a decrease in program payments. December is currently forecasted to have a $1.20/cwt payment. Total payments for Tier 1 can be seen in Figure 3.
Figure 3.
Figure 4.
During periods of exceptionally tight margins, producers saw Tier 2 payments (figure 4) from January ($0.06/cwt) through August ($1.53/cwt). As we have seen margins recover, August’s payment looks to be the last Tier 2 one of the year.
The Dairy Margin Coverage (DMC) program is a crucial tool for managing financial risks in dairy farming, especially given the many unpredictable factors that can negatively affect milk market prices. This year, the DMC program has been crucial for producers, especially for small and medium-sized farmers, as it cushioned the blow of low margins.
You can find the full text of the proposed stopgap spending bill, which includes the extension of the 2018 Farm Bill through September 30, 2024, on the official House of Representatives document repository. This proposal was released by House Speaker Mike Johnson. To read the full continuing resolution, you can access it directly via this link: Continuing Resolution including 2018 Farm Bill Extension
https://www.govinfo.gov/content/pkg/BILLS-118hr4664rh/pdf/BILLS-118hr4664rh.pdf
For more information and details you can reach at
https://www.govinfo.gov/content/pkg/CRPT-118hrpt145/pdf/CRPT-118hrpt145.pdf
