Margin insurance helps three quarters of milkers in US

This government-subsidized margin insurance helped an estimated 75% of all American dairy farmers keep their businesses running last year. Dairy Margin Coverage (DMC) is not insurance against low milk prices, so it does not help against all risks. This is mainly intended for smaller and medium-sized companies, up to an annual production of 2,3 million kilos of milk. Insurance does help to secure a fixed margin between feed costs and yields, so dairy farms do not have to fall through the cracks. The margin is calculated monthly according to a fixed formula.

More than 1,1 billion in first instance aid
The fact that the program has proven its worth in the past year is evident from the amounts paid out. According to the latest data from the US Department of Agriculture (USDA), approximately $1 billion in aid had been disbursed through November. The American NZO, the NMPF, estimates that approximately $1,1 billion will be paid out over the entire year. Due to rising milk prices in 2021, less and less support had to be paid towards the end of the year.

Since 2021 was a very moderate milk price year, the government recently decided to approve an additional support package. This package can be paid retroactively to companies that produced milk last year. This package, worth $580 million, is available to dairy farms that still had to rely on an old and lower production reference to take out DMC insurance.

Because many companies did not really have to face difficulties thanks to the program, milk production was able to maintain a good level and even increase slightly: from more than 101 billion kilos in 2020 to 102,6 billion kilos, the USDA reports.