Supplemental Dairy Margin Coverage

Supplemental Dairy Margin Coverage (Supplemental DMC) is a program enhancement to Dairy Margin Coverage which allows small and mid-size dairy operations the opportunity to establish a supplemental production history in addition to an already establis

The SDMC Program, administered by the Farm Service Agency (FSA), is a voluntary risk management tool that allowed participating dairy producers to increase their covered production history if they increased milk production levels from their prior established production history and then could cover that additional history through SDMC. It offers financial assistance when the margin between the all-milk price and average feed cost falls below a coverage level chosen by the producer.

The ultimate benefit of the DMC-Dairy program will help protect farm equity and reduce financial losses that occur during times of low-income margins for dairy operations.

Milk is produced in all 50 states and the maintenance and expansion of existing markets for dairy are vital to the welfare of milk producers in the United States (U.S.). The dairy industry has experienced dramatic structural changes at all levels of the marketing channel that have directly affected milk prices, dairy product sales, farm incomes, and other direct aspects of dairy profitability and volatility. Low margins have been a producer complaint for some time. In addition, low prices, high production costs, and oversupply have been issues for the dairy industry in recent years. To address these concerns, DMC was included in P.L. 115-334 to replace existing dairy price and income support programs. For supplemental DMC, P.L. 116-260 was implemented provisions of supplemental DMC and expand production history for eligible dairy operations. The DMC program is much like an insurance program in that the dairy operation selects a level of coverage, and pays a premium based on the amount of coverage (and an administrative fee). As is customary with other insurance or insurance-like programs both agricultural and otherwise, the regulations only provide for coverage prospectively and contemplated that a party's level of coverage will remain unchanged unless during a designated enrollment period the party makes a different election. The amount of coverage chosen by producers in a participating dairy operation requires two selections. One is the margin trigger and the second is the amount of milk covered (which is based on a history of production).

Dairy operations with established supplemental production history will be eligible for indemnity payments when margins trigger starting in January of 2021 through December 2023. The program authority to fund supplemental benefits ends in December of 2023.

An eligible dairy operation must complete and submit a contract; agree with all terms and conditions in the contract; comply with instructions issued by or for CCC; provide proof of milk production commercially marketed by all persons in the dairy operation; and provide any other supporting documentation to any county FSA office. Producers must certify to accuracy and truthfulness of the information in their contracts and supporting documentation.

DMC participants are required to enroll annually unless are locked into a multi-year contract. Annual contracts are optional and may opt out for a year.

Any producer who is dissatisfied with a determination made may request reconsideration or appeal of such determination under 7 CFR part 11 or part 780.