Submitted Online via http://www.regulations.gov to Docket ID USDA-2019-0001
March 1, 2018
Secretary Sonny Perdue
U.S.
Department of Agriculture
1400 Independence Ave., S.W.
Washington, DC 20250
Dear Secretary Perdue:
Western States Dairy Producers Association (“WSDPA”) is a voluntary association of state dairy producer organizations from Arizona, California, Idaho, New Mexico, Oregon, Texas, Utah, and Washington, each funded and directed by dairy farmers. Our member organizations include five of the ten largest dairy states in the country which collectively produce approximately 40% of the milk in the United States.
We thank you and USDA for soliciting comments from farmers on the implementation of new programs authorized by the 2018 Farm Bill. Our comments are directed toward the implementation of the Dairy Margin Coverage (“DMC”) program.
As you are aware, 2017 and 2018 were challenging years for dairy farmers across the United States. Congress recognized that existing federal safety net programs did little to mitigate the economic harm and responded by including DMC as part of the 2018 Farm Bill. It is imperative that USDA implement DMC as quickly as possible to provide much needed assistance.
Based on information compiled by USDA-FSA, the participation of Western dairy farmers in the former Margin Protection Program (“MPP”) declined substantially over the life of the program. In 2015, 2,699 dairy farmers in our states participated in MPP, and approximately 38% purchased coverage above the base level. By 2017, the last year for which FSA has posted statistics, the number of participating farms had declined to 2,282, and less than 1% purchased supplemental coverage. MPP simply was not working for dairy farmers.
The changes to MPP (now DMC), we believe, will provide a more functional safety net. There are several specific elements that we wish to emphasize:
Feed Cost Calculations
- The inclusion of high-quality alfalfa hay from the five largest dairy producing states in the DMC feed cost formula is essential. Three of the five states to be surveyed are in the west (California, Idaho, and Texas). The inclusion of the actual costs of hay incurred by our member farms will result in a feed cost determination more reflective of actual feed costs. The Farm Bill provides USDA not only the authority but the obligation to utilize this price in the feed cost calculation.
- The mandates that USDA (a) complete a study of the entire DMC feed price calculation and assess its accuracy relative to actual feed costs paid by dairy farmers and (b) examine the use of corn and corn silage prices in the formula are critical to maintaining a program that achieves the goals set forth by Congress.
Application of Premiums Paid Under MPP
- The mechanism by which farmers who paid premiums for supplemental MPP coverage may receive credit against DMC premiums must be timely, efficient, and fair. Producers who purchased supplemental MPP coverage should be permitted to apply past premiums credits to new DMC coverage at the time of sign-up. Any credits that are not utilized in the first year of sign-up should be available to producers in future years or refunded at the option of the producer.
- If for any reason the calculation and application of past premium credits would otherwise delay the implementation of DMC, the program should be opened for signup, and premium payments for DMC deferred until any mechanism for applying credit for past payments is developed.
- For those producers who elect to have their past premiums refunded, as the Farm Bill mandates, the process should be equally streamlined and payments processed promptly.
Other Issues
- The many differences between DMC and MPP will be unfamiliar to many dairy producers. It is imperative that USDA in general, and local FSA offices in particular, provide adequate resources to educate producers DMC features and facilitate fully informed decisions. Key changes that must be emphasized include:
- The decrease in the minimum percentage of milk that must be enrolled from 25% to 5% of production;
- Changes in available margin levels and premium rates;
- The ability to insure milk at a higher margin rate in Tier I and a lower margin rate at Tier II; and
- The ability of producers to participate in DMC, Livestock Gross Margin-Dairy, and Dairy Revenue Protection.
USDA has a history of developing its farm support programs to provide maximum flexibility to producers in terms of payment and participation. That should be the goal here, as well. We appreciate all of the efforts of the Department to implement the DMC program and provide the improved dairy safety net that farmers require.
Sincerely,
Jim Boyle, President
Western States Dairy Producers Association
