Farm bill is good fit for region’s dairies
By Mikkel Pates, Agweek Magazine | |
McClatchy-Tribune Information Services |
Salfer unveiled a computer model that predicts how the program works for different sized operations in the context of predicted input costs and milk price scenarios.
Simple signup
A basic level of coverage is
Unlike the commodity crop provisions in the farm bill, dairymen have the option of signing up every year through the farm bill life, which is five years.
The system favors farmers with smaller operations, who pay premium buy-ups starting at
Salfer noted that a
Calculator tool
The U of M's program calculator figures in a number of national factors, including projected commodity prices and dairy demand. It also includes a look-back function, showing how the same formula with the same factors would have predicted the prices in years past, and how it would have compared the projections with what actually happened.
In six out of seven of the past years, the model correctly predicted a positive return for participating in the program. The models can't always predict the so-called "black swan" economic events such as the major recession melt-down in 2008, which affected demand. Related models also allow farmers to look at other nonfeed costs for the same years, which the farmer might wish to cover by boosting the premium somewhat.
Salfer said the formula might be different in areas such as western
U.S. Rep.
"One of the problems with having such a dependence on exports is that it can change in a hurry, and it can be very volatile," he said.
"I'm hoping that everybody signs up for the catastrophic coverage, pays the
Small is good
Salfer said farmers must choose between the MPP-Dairy and the old Livestock Gross Margin-Dairy program, which is run by the
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