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DMC alfalfa adjustment could add 55 cents to margin payments

Dairy farmers enrolled in the Dairy Margin Coverage Program for 2021 have received a coverage payment for the first six months of the year and an industry leader says USDA’s recently announced adjustments to the program will help even more as feed costs continue to squeeze margins.

“Our feed costs have gone up roughly 20 percent across the board, really being driven by corn and soybean prices.”

Mike Hutjens, professor emeritus at the University of Illinois, tells Brownfield the $100 million USDA has earmarked for an improvement to alfalfa prices won’t have the same impact on all dairy farms.

“It covers five million pounds of milk which means that’s probably really going to affect farms that are 200 cows or less,” he says.

Hutjens says regionally, there are large price differences in the cost of alfalfa hay and its quality.  If the formula moves from an average of good quality to premium hay price, he estimates “If hay goes up about $40 a ton, that would mean about a difference of 55 cents per one hundred pounds of a higher feed cost.”

Nearly three-quarters of dairy operations in the U.S. are enrolled in the 2021 program which has distributed more than $550 million in payments.  USDA’s adjusted alfalfa price is retroactive to 2020 and is a permanent change for the program.