Matt Reese caught up with hog farmer Kyle Brown and dairy farmer Chris Weaver to talk livestock and the farm bill for the Ohio Ag Net Podcast Ep. 343, available at ocj.com.

Livestock and the farm bill

By Matt Reese

Of course, a large portion of the agricultural funding in the farm bill is directed at crop production, but as the farm bill debate continues many livestock producers and organizations are also heavily invested in the process. House Agriculture Committee Chairman Glenn “GT” Thompson (R-PA) and Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) released documents providing an overview of their farm bill priorities and plans this spring.

In terms of safety nets, a growing percentage of dairy producers have been benefitting from the updated Dairy Margin Coverage Program (DMC). The farm bill program offers protection to dairy producers when the difference between the all-milk price and the average feed price (the margin) falls below a certain dollar amount selected by the producer. DMC has been authorized through calendar year 2024.

DMC Sign-up for 2024 just wrapped up in April. It has been a good tool for Ohio diary producers, said Jason Hartschuh, Ohio State University Extension field specialist in dairy management and precision livestock.

“The DMC program provided about $2.80 per cwt of support in 2023 for the first 5 million pounds of milk production history if producers enrolled at the $9.50 per cwt margin level. Farms received 2 months of catastrophic payments when the margin fell below $4 per cwt,” Hartschuh said. “Over the past 3 years, the DMC program when enrolled at a $9.50 per cwt margin more than covered the total program premium. All current indications are for stronger milk prices in 2024 and lower feed costs; however, risk management is still critical. For tier-one coverage, there is currently a guaranteed margin payout for January and February totaling almost 60% of the program premium. While March and the rest of 2024 is projected to have margins above the $9.50 per cwt level, many different domestic or international events could affect this projection by either increasing feed costs or lowering milk price. As a risk management strategy against either one of these two events, the DMC program is a very useful tool for producers.”

The program has been particularly helpful for mid-sized producers in navigating the challenges of complex dairy pricing and economics.

“Dairy pricing is extremely complicated. There’s a joke that only 10 people, or maybe five people nowadays, in the whole United States understand it. The DMC came in and I think a lot of dairy farmers are engaging in that. It’s actually been a really good program. It limits out at a certain amount of milk production, so it works really well for dairy farmers that are in the 200- to 300-cow range, maybe even up to 500 cows,” said Chris Weaver, a dairy farmer from Williams County. “After that it becomes not as helpful, but it’s helpful in an emergency. It’s a disaster recovery. DMC is based on feed cost and milk production and it works a lot like crop insurance. It is a big protection system for the dairy farmer. Other than that, you’re kind of stuck hedging on the on the market and hoping you’re going to guess right. One of the biggest rules that has changed in the last few years related to the farm bill is the way DMC pricing was done. Again, it’s a really complicated, so getting a good farm bill and trying to fix some of those issues has been really important to the dairy industry.”

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