(DTN) -- Dairies that participate in the U.S. Department of Agriculture's Margin Protection Program will now be able to update their production history when an eligible family member joins the business.
U.S. Agriculture Secretary Tom Vilsack announced the change Tuesday to the voluntary program established by the 2014 Farm Bill.
The MPP was established to protect participating dairy producers when the margin (the difference between the price of milk and feed costs) falls below a level of protection already selected by the producer.
The change in the program strengthens family dairy operations by allowing children, grandchildren or their spouses to protect the production from dairy cows they bring with them into the operation when they become part of an operation already enrolled in the MPP.
Vilsack said the change also is intended to help new dairy farmers get started in the family business while still maintaining safety net coverage for the farm.
"By strengthening the farm safety net, expanding credit options and growing domestic and foreign markets, USDA is committed to helping American farming operations remain successful."
The changes to the MPP will become effective on April 13, 2016, and will allow dairies that have already enrolled in the program and had an intergenerational transfer to increase the dairy operation's production history during the 2017 registration and annual coverage election period.
The next election period will be held beginning on July 1, 2016, and ending on Sept. 30, 2016. However, for any intergenerational transfers occurring after July 1, 2016, dairies must notify the FSA within 60 days of purchasing additional cows.
Participating dairies will be allowed one intergenerational transfer at any time until 2018.
Dairy producers can receive basic catastrophic protection that covers 90% of their milk production at a $4 margin coverage level for $100 per year. For additional premiums, dairies can protect 25% to 90% of production history with margin coverage levels from $4.50 to $8 in 50-cent increments.
Dairies must enroll in the program annually to receive margin protection. The MPP final rule also provides improved risk protection for dairies paying premiums, in order to buy-up higher levels of coverage. However, they must clarify that 90% of production is covered below the $4 level, even if they have selected a lower percentage above the $4 margin.
The rule allows producers to pay their premium through additional options, including through their milk cooperative or handler.
Vilsack added that if the MPP existed from 2009 to 2014 with current participation numbers, premiums and fees would have totaled $500 million, in addition to providing dairies with $2.5 billion in financial assistance. That would total almost $1 billion more than the old Milk Income Loss Contract program.
For more information, visit FSA online at www.fsa.usda.gov/dairy or stop by a local FSA office and ask about the Margin Protection Program