The deadline to enroll in the Margin Protection Program for 2016 is this Friday, November 20. Several producers plan to use this federal insurance program as a risk management tool going into the New Year.

Here’s what you need to know about

MPP:

• Changes for 2016 – Margin Protection Program (MPP) which was born out of the 2014 Farm Bill. Farmers already enrolled in the program will see an increase in production of 2.61%. Producers who are enrolled in the Risk Management Agency’s Livestock Gross Margin for Dairy program (LGM) are not eligible to enroll in MPP. You can read more on these changes here.
• New Decision Tool – The advanced decision tool takes several points of a producers operation into consideration to provide a recommended coverage level. It looks at the number of cows a farmer is milking, how much milk they are making per cow, other expenses, risk management tools employed and financial information, such as working capital per cow and debt-to-asset ratio. Can’t decide if you should enroll, give the decision tool a spin. More here.
• MPP is a safety net– Producers across the country are feeling the squeeze of an almost $8 margin. But after a year of the highest milk prices in recent history, producers must remember the current price reflects the average of what producers have experienced over the last 15 years.  “This program was designed not to be a revenue enhancement program,” said Jim Mulhern president and CEO of National Milk Producers Federation. Economists don’t predict a steep decline in milk prices for 2016, year but Mulhern points out nobody predicted 2009 either. “We can’t predict the future,” he says. “It’s a safety net and it’s there for us, so we need to use it.”

Enrollment might decline – According to a survey of about 100 farmers from 27 states that we conducted in August, some farmers who participated in 2015 won’t enroll in 2016. Roughly 70% of survey respondents say they participated in the MPP program last year. About 28% of those who participated say they will not participate again in 2016 (even though, under the rules, they are now enrolled for the life of the program). About half of the responses came from the Midwest, a fourth from the Northeast and a fifth from the West.

Source – Dairy Today