Dairy & Livestock

Dairy & Livestock: Title I (Commodities), Title XII (Miscellaneous)

Provides support to dairy producers through two new programs and to livestock operations through disaster assistance programs.

Highlights

• The Margin Protection Program (MPP) for dairy producers introduces a margin insurance program that provides benefits to dairy producers when the difference between milk prices and feed costs falls below a target margin.
• The Dairy Product Donation Program (DPDP) requires the Secretary of Agriculture to purchase dairy products at market prices for donation to nutrition programs whenever the margin between milk prices and feed prices falls below the minimum margin specified under the MPP.
• The Dairy Product Price Support Program (DPPSP) and Dairy Export Incentive Program (DEIP) are repealed. The Milk Income Loss Contract (MILC) Program is extended retroactively to October 1, 2013, and remains in place until the MPP is operational, but no later than September 1, 2014.
• The Livestock Indemnity Program (LIP), Livestock Forage Disaster Program (LFP), and Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP)—providing protection against losses from natural disasters, including disease—are now funded through the Commodity Credit Corporation (CCC) and made permanent.
• Country of Origin Labeling (COOL) regulations remain in place and are extended to include venison (Title XII).

New Programs and Provisions

The Margin Protection Program (MPP) for dairy producers offers producers insurance based on the average actual dairy production margin (difference between the all-milk price and average feed cost), with payments beginning when the margin falls below $4.00 per hundredweight (cwt) for a 2-month period. Benefits apply to a participating operation’s production history, adjusted annually to reflect national average milk production increases. All dairy operations are eligible to participate, and pay only the administrative fee ($100) if they select protection at the minimum margin level ($4.00 per cwt of milk). Higher levels of protection are available, for which producers must pay both the administrative fee and a premium. Premiums are lower for coverage below 4 million pounds of milk production (equivalent to a herd of about 185 cows). These lower premiums are also reduced by 25 percent during both 2014 and 2015.

The Dairy Product Donation Program (DPDP) requires the Secretary of Agriculture to purchase dairy products for donation to low-income groups when dairy margins—as determined under the MPP—fall below $4.00 per cwt for 2 consecutive months. The program remains in effect until specified margin or product price levels are met or until purchases have been made for 3 consecutive months. Dairy products will be purchased at prevailing market prices in consultation with public and private nonprofit organizations serving the nutrition needs of low-income populations, who will distribute the donations through food banks and other feeding programs.

The Livestock Indemnity Program, Livestock Forage Disaster Program, and Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program—which protect livestock producers against losses from natural disasters, including disease—are now funded through the CCC and made permanent, and the provisions are retroactive to cover losses incurred beginning October 1, 2011.

Repealed Programs and Provisions

The Dairy Product Price Support Program is repealed.

The Milk Income Loss Contract program is extended until the Margin Protection Program (MPP) is operational or until September 1, 2014, whichever is earlier, after which it is repealed.

The Dairy Export Incentive Program is repealed.

Economic Implications:

• An insurance-based program offers dairy producers an opportunity to choose coverage levels based on their willingness to pay for risk protection. The new margin insurance program directly links protection to a key economic risk faced by dairy producers. The new program continues to provide proportionally greater support to smaller producers, through lower premiums, and establishes safeguards against rising program costs by both restricting annual increases in covered production and raising coverage costs for higher levels of production.   

• Reauthorization of the suite of livestock disaster assistance programs—LIP, LFP, and ELAP—provides renewed assurance to livestock producers regarding protection against losses from natural disasters, including disease. The programs are made permanent, and are now funded through the CCC, providing livestock producers with predictable payment levels in loss circumstances. Retroactive coverage of losses incurred in fiscal years 2012 and 2013 will assist producers affected by both the historic 2012 drought and the October 2013 blizzard in South Dakota.