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Dairy Margin Coverage: Looking to 2020

Dairy Margin Coverage: Looking to 2020
By Andrew Sandeen
With 2019 sign-ups for Dairy Margin Coverage a thing of the past, sign-ups for 2020 have now begun and will run through December 13th. At this point, the good news is that there are a couple of months to make a decision. The challenging news is that there will not be the advantage of knowing any final 2020 feed or milk values before the final decision must be made.
For those who opted for the one-year sign-up in 2019, there is no obligation to participate in 2020. For those who took advantage of the discount and committed to five years, the paperwork and administrative fee will need to be submitted to FSA by December 13th. There will be more time to pay for premiums, as final payment won't be due until September.
Everyone would love to have a crystal ball and know what 2020 will look like. At this point, it doesn't appear that the $303 million paid to U.S. dairy producers for DMC coverage in 2019 will be repeated in 2020. Current projections for 2020 don't have margins dropping below $9.75 (see figure), suggesting there might not be any indemnity payments made if there isn't a significant drop in milk price or increase in feed prices. However, nobody knows for sure what the future has in store.
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