Dairy farm insurance options explained

Jayne Sebright, Center for Dairy Excellence director, welcomed dairy farmers and others to the 2019 Fall Producer Roundtable session Thursday at AgChoice Farm Credit, Lewisburg.

LEWISBURG — Dairy farmers got valuable information Thursday morning at a seminar hosted by AgChoice Farm Credit.

Zach Myers, risk education manager for the nonprofit Center for Dairy Excellence, spoke about dairy margin coverage. It was described as comparable to crop insurance, except it protects dairy farms.

“It is a USDA mandated program authorized by the 2018 Farm Bill,” Myers said. “It allows dairy farmers to buy an insurance policy that guarantees them a margin up to a $9.50 per hundredweight of (raw) milk production.”

Dairy farmers, it was noted, incur risk as their herds produce milk and when it is marketed.

“It has a feed cost component to it and it has a milk price component to it,” Myers explained. “If milk prices go up and feed prices stay even, you increase your margin, which is a good thing. But if you have the feed price go up and milk prices stay the same or go down, you’re reducing your margin. That is what the dairy margin coverage protects against.”

Myers said a range of options were available, protecting margins or profits from $4 per hundredweight of raw milk up to a $9.50 margin. If the price dips below the threshold they have paid for, they will get a payment for the difference.

Myers said the insurance, available through a local Farm Service Administration (FSA) office could be the means by which small diary farms stay afloat. The enrollment period ends Friday, Dec. 6.

The past few years were not kind to dairy farmers. The sentiment was echoed by Jim Van Blarcon, board member of the Pennsylvania Milk Marketing Board. His agency, under the umbrella of the commonwealth’s Department of Agriculture, sets minimum retail prices and premiums for over orders paid by Class 1 bottlers to farmers. The jurisdiction covers milk produced, bottled and sold in Pennsylvania.

“It’s been a long struggle,” Van Blarcon said. “We are into our fifth year of disastrous, depressed milk prices.”

The board is required to operate within the parameters of the law, Van Blarcon said. They have asked the state to give them more legal tools but with little success to date.

Van Blarcon said his board does not have any say over milk which is brought in from out of state, which would be an area for a new legal tool to be applied.

The relatively small size of a Pennsylvania dairy farm, 85 to 88 cows, makes it tough for smaller farmers to compete against the traditional dairy states. Even neighboring New York has, on average, larger herds.

Staff writer Matt Farrand can be reached at 570-742-9671 and via email at matt@standard-journal.com.

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