The following is from USDA Farm Service Agency:
The 2014 Farm Bill authorizes a new dairy program, the Margin Protection Program for Dairy Producers (MPP-Dairy), which will replace the Milk Income Loss Contract (MILC) program no later than September 1, 2014. The MPP-Dairy program is a voluntary program that provides dairy operations with risk management coverage that will compensate producers when the difference between the all-milk price and the average cost of feed falls below a certain level selected by the producers in a dairy operation.
Eligible producers can obtain either a catastrophic level of coverage for their dairy operation by paying a $100 administrative fee annually or they may obtain increased coverage at various levels by paying a premium in addition to the administrative fee. Available price coverage levels begin at $4.00 and coverage may be increased in $.50 increments through $8.00 per hundredweight. Available coverage percentages begin at 25 percent and coverage may be increased in 5 percent increments through 90 percent. A dairy operation’s selection of a $4.00 coverage level with a coverage percentage of 90 is considered the catastrophic level of coverage. Indemnity payments under the program will be triggered when margins fall below the producer-selected levels.
