MPP is an insurance-like program for dairy producers, who select a margin level that they would like to protect on their milk sales. Farmers can choose to protect margins from $4-$8/cwt. The $4/cwt level costs $100 to cover administrative fees. From the $4/cwt level, coverage levels increase by $0.50 increment (e.g. $4.50/cwt, $5.00/cwt, etc) to $8/cwt. As the margin levels increase premiums also increase.
In early August, USDA published the milk margin for May/June 2016 and it was $5.76. The calculated USDA milk margin is used in the MPP to determine at what levels (and if) this program will make a payout.
For the May-June period, those with $6/cwt or more coverage received a payout. This was the first time the program paid at a $7/cwt or lower level. There were a couple payments in 2015 at the $8/cwt level and a payout in March-April 2016 at both the $8 and $7.50 coverage levels. The May-June payout announcement is the largest in the programs two-year history.
Some producers have questioned if MPP has been worth the cost of the premiums. This and other issues regarding the program are currently being reviewed by staffers in Congress. Sources say an effort is being made as to whether or not some changes could be made administratively rather than having to propose legislative changes, which would take longer.
Near the end of the 2014 Farm Bill debate, some funding was taken out of the dairy program to meet budget requirements. The changes made are now being reviewed.