The disaster package passed in early February 2018 made several modifications designed to improve the timeliness and affordability of the Margin Protection Program (MPP) for dairy producers. This bulletin provides an overview of the MPP modifications and includes a downloadable Excel calculator that can be used to estimate MPP benefits in 2018, as well as in prior years, under the revised program parameters.
Beginning with the 2018 coverage year, the Margin Protection Program will be modified to provide enhanced coverage at more affordable rates. Changes to the program include:
- Tier 1 coverage, i.e. milk eligible for the lower-tiered MPP premiums rates, was raised to 5 million pounds of covered milk. This was increased from the previous level of 4 million pounds of covered milk.
- The premium rates for Tier 1 coverage were reduced significantly. Premiums for $4.50 and $5 coverage were eliminated, and other premiums were reduced by an average of 70 percent. The downloadable Excel MPP calculator includes a chart demonstrating the new Tier 1 premium rates.
- MPP margins and program payments will be calculated monthly. Previous the MPP margins were calculated on a bi-monthly basis six times per calendar year.
- Waives the $100 administrative fee for underserved producers such as limited resource, beginning and minority farmers.
- Dairy farmers will be given an opportunity to re-enroll in MPP or change coverage levels for the 2018 coverage year. The sign-up deadline was extended 90 days into May 2018.
- Farmers participating in Livestock Gross Margin Insurance for Dairy Cattle are not eligible for MPP coverage.
The downloadable Excel calculator can be used to estimate MPP program payments and premium rates for 2018 for a variety of farm sizes. Currently the calculator includes MPP margin forecasts for 2018 from USDA’s MPP decision tool.
Users can adjust the production history (C2), the coverage percentage (C3), and the expected MPP margins (E9:P9) to see how MPP will perform in 2018, as well as in prior years, under a variety of price environments and for different farm sizes.