In place of milk price and revenue support programs, the 2014 Farm Bill has created the Margin Protection Program for Dairy Producers, allowing a dairy operator to self-select coverage options to protect the farm against declines in national average production margins.
A web-based decision support tool and companion educational materials have been developed to help dairy operators make key coverage decisions for both the MPP and the Livestock Gross Margin-Dairy insurance program.
Researchers at the University of Illinois led the National Coalition for Producer Education to develop the tools along with the USDA Farm Service Agency and the National Program on Dairy Markets and Policy.
"The MPP decision tool is designed with farmers in mind," said U of I agricultural economist John Newton. "Tool users need only input their milk production history, and then in just four clicks of a mouse, farmer-specific MPP registration forms can be generated." Newton said that the tool is also optimized to run on a wide platform of electronic devices.
"With the MPP decision tool, dairy farmers can use farm-specific milk production variables in conjunction with daily CME Group futures prices as part of the consideration for coverage-level choices under MPP and LGM-Dairy," Newton said.
"To highlight the strategic thinking that needs to occur during the registration and coverage modification process, dairy farmers using the MPP decision tool have the ability to analyze historical U.S. milk and feed prices," Newton said. "This feature is for research purposes only, but provides the opportunity for dairy farmers to go back in time to determine how MPP would have worked as a risk management instrument had it been in place during prior years."
Newton said that for dairy operators who would like to use their own expectations of milk, feed, and margin price risk, the MPP decision tool will soon include an advanced interface that will allow dairy operations to self-select all 48 milk and feed prices to determine how MPP may function to smooth dairy production margins.
"Another helpful feature is that when dairy operators use the MPP decision tool, with one click of the mouse they can easily toggle between the MPP web tool and the LGM-Dairy Analyzer , which they can use to examine forthcoming insurance contract offerings and anticipated premium costs," Newton said.
In partnership with NCPE, DMaP will host five Train-the-Trainer workshops across the United States. For more information and educational material, visit the FSA website.
Source: University of Illinois