Dairy Margin Coverage Program (DMC)

Dairy Margin Coverage Program (DMC)

This program may have additional incentives or benefits for those who are underserved. Learn more about our terminology.

 

What is this program?

The Dairy Margin Coverage program is a voluntary risk management program that offers protection to dairy producers when the difference between the all-milk price and the average feed price (the margin) falls below a certain dollar amount selected by the producer.   

The program offers dairy producers: (1) catastrophic coverage, at no cost to the producer, other than an annual $100 administrative fee (which is waived in some cases); and (2) various levels of buy-up coverage.

To qualify for the administrative fee exemption as a limited resource, beginning, or socially disadvantaged farmer or rancher, form CCC-860 must be completed and submitted at the time of 2018 registration for coverage to the dairy operation’s local County FSA Office, if not already on file.

 

How can I use this program?

Use the catastrophic coverage to help with financial hardship:

• It provides payments to participating producers of dairy operations when the national dairy production margin (defined as the difference between the national all-milk price and average feed costs) is less than $4.00 per hundredweight (cwt) and cover 95% of the production history.

Purchase Buy-Up coverage for additional financial protection:

• It provides payments when margins are between $4.00 and $9.50 per cwt., and a coverage percentage of their existing production history.

To determine the appropriate level of DMC coverage for a specific dairy operation, producers can use the online dairy decision tool.  

 

Who or what is eligible and what are the eligibility requirements?

• All dairy operations in the United States are eligible for the DMC program.
• An operation can be run either by a single producer or multiple producers who commercially produce and market cows’ milk.
• Each producer on the operation must share in the risk of producing milk and make contributions (including land, labor, management, equipment, or capital) to the operation of the dairy that are at least equal to the individual or entity’s share of the proceeds of the operation.

To participate in and receive buy-up coverage, a producer must:

• Pay a premium that varies with the level of protection the producer elects
• Enroll annually and pay the administrative fee and premiums as applicable

To be eligible, a dairy operation must adhere to the following:

• Have a production history determined by the USDA Farm Service Agency (FSA)
• Be registered to participate during a signup announced by FSA.

If a dairy is operated by more than one producer, it will be registered as a single operation. If producers operate two or more dairies, each operation will be registered separately. Eligible program participants in DMC are also eligible to participate in the Livestock Gross Margin for Dairy Producers Program and the Dairy Revenue Protection Program administered by the Risk Management Agency.

 

Are there any deadlines?

• The registration and re-enrollment period occurs once a year. Contact your local FSA service center for any other specific deadlines.
• A new dairy operation that has been established after a registration period closes is required to submit a contract within the first 90 calendar days in which the dairy operation first commercially markets milk for the calendar year or wait until the next registration period for the next calendar year of coverage. Coverage for dairy operations registering within the first 90 days of marketing milk will become effective beginning the next full month after registration.
• New dairy operations that first register for the DMC program for a calendar year after the start of a calendar year can lock-in coverage for the premium discount by paying a pro-rated premium. That premium will be based on the portion of the calendar year for which the dairy purchases the coverage.

 

Is there anything else I should know?

• Supplemental Dairy Margin Coverage (SDMC) is an option for eligible DMC dairy operations that have increased milk production since first establishing a production history under DMC and may establish a supplemental production history that will become part of any future DMC program contract.
• For participation in SDMC, participating DMC dairy operations with 5 million pounds or less of production history that have increased milk production levels since first establishing production history during the initial enrollment in either MPP-Dairy or DMC are eligible for SDMC. The supplemental production history is determined by subtracting the current production history from the 2019 milk marketing’s with the result multiplied by 75 percent. DMC covered production is a combination of established production history and if applicable supplemental production history and is limited to 5 million pounds of coverage due to supplemental.

 

How do I apply?

To apply for DMC, dairy operations must provide the following items to their local FSA county office:

• Form CCC-800, “Dairy Margin Coverage (DMC) Production History Establishment”
• Form CCC-800A, “Dairy Margin Coverage (DMC) Supplemental Production Establishment”
• Form CCC-801, “Dairy Margin Coverage (DMC) Contract and Annual Coverage Election”
• Pay the $100 administrative fee (see information below for details).
• Pay any premiums.

These forms are available online and at FSA county offices.

 

 

 

Page last updated: May 2, 2023