BARRE — Approximately 65 percent of the state’s dairy farmers have enrolled in a federal insurance program that protects them against dramatic price fluctuations.
Friday was the deadline for farmers to enroll in the Dairy Margin Protection Program, which is part of the 2014 U.S. Farm Bill signed into law in February and offers dairy farmers insurance to protect against narrowing profit margins.
Of the state’s 874 dairy farms, 572 enrolled in the insurance program, said Robert Paquin, state executive director of the Vermont office of the USDA Farm Service Agency. “In terms of program outreach, I’d say it was pretty successful,” Paquin said.
The overall participation rate is higher than it might immediately appear. According to Paquin, 58 dairy farms do not participate in USDA programs. The insurance program helps to shield dairy producers from market fluctuations that affect their profit margins and, ultimately, their bottom lines, such as the cost of feed and fuel, and the price they get for their product.
For an administrative fee of $100, a dairy farmer can purchase insurance that protects them against a change in the profit margin of as much as $4. However, farmers are free to purchase more coverage if they wish, up to $8. Rates are set based upon the farm’s production history from 2011-2013.
For the average Vermont dairy farm, which produces 4 million pounds of milk from 140 cows, the cost to buy $6.50 in margin protection costs 8 cents for every 100 pounds. Of the 572 dairy farms that enrolled in the program, 357 — or 62 percent — opted to purchase more than just the basic coverage. Paquin’s office heard from 148 dairy farmers who said they would not participate in the program for a variety of reasons.
“I think, for some, this was a new program, and some are taking a wait-and-see approach,” Paquin said. “They might have felt they couldn’t afford the premium. Also, the price of milk has been strong.”
Dairy farmers who opted not to enroll in the program will have additional opportunities to enroll annually, 2015 through 2017. The program might increase in popularity in 2015.
According to Paquin, dairy prices are projected to drop next near by 25 percent, to $18 a pound. And of the 148 farms that did not enroll, 25 participate in a different federal program known as the Livestock Gross Margin for Dairy Cattle (LGM-Dairy) insurance program.
All told, 597 — or 68 percent — of dairy farmers in the state participate in a federal risk-management program. Paquin said he expects to receive a handful of applications in the mail that were sent out by farmers Friday.
Source: Rutland Herald