By Leonard Polzin
The Dairy Margin Coverage (DMC) program has been in place since 2019, when it replaced the Margin Protection Program for Dairy. Seven full program years are now in the books. The program has paid out over $3 billion in indemnities through 2025, has been reauthorized through calendar year 2031 under the One Big Beautiful Bill Act, and has had its Tier I production history ceiling raised from 5 million pounds to 6 million pounds beginning in the 2026 program year. At the same time, the dairy industry has changed. Herds are larger. Non-feed costs have risen. The dairy product complex has also continued to evolve in ways that the price discovery system does not fully capture.
This article compiles current discussions among industry participants, academic economists, and producer organizations about the DMC program. The four questions that follow address how DMC has functioned, what current market conditions mean for the program, and the broader risk management landscape. The analytical detail behind the answers is in the references and the appendix.
The Dairy Margin Coverage Program has historically served as a relatively good risk management tool for dairy operations. Is that still the case?
Math through seven years of program history is favorable for the operations the program was designed to serve. Over the 2019 through 2025 period, the program triggered payments in 39 of 84 months at the $9.50 Tier I coverage level.
Source : wisc.edu