Two Powerful Safety Nets for Dairy Producers – Are You Covered?

As dairy producers know all too well, the dairy industry is prone to significant volatility and risk. Fluctuations in milk prices, feed costs and other factors can wreak havoc on profit margins. Fortunately, there are two important risk management tools available to dairy operations.

Dairy Margin Coverage (DMC)

DMC is designed to help provide risk protection to dairy producers when the difference between the national all-milk price and the national average feed cost (the margin) falls below a certain dollar amount selected by the producer. The 2025 signup opened on January 29. The signup deadline is March 31, 2025.

DMC allows dairy producers to select a $4.00 to $9.50 coverage level per hundredweight. When enrolled, participating dairy operations receive payments anytime the monthly margin falls below the selected coverage level. In 2024, the program paid producers in January and February.

The January 2025 margin has not been announced, but 2025 projections show margin above the $9.50 coverage level, resulting in no payments to producers. Although not many payments are projected, producers are still encouraged to sign up as markets remain volatile.   

Dairy Revenue Protection (DRP)

In addition to DMC, another risk management option for dairy producers to consider is Dairy Revenue Protection (DRP). DRP is also a USDA program, but it is run through an insurance provider. The plan insures for unexpected declines in the quarterly revenue from milk sales. DRP sets a quarterly price floor based on Chicago Mercantile Exchange (CME) futures prices. It does not factor in feed costs like the DMC program. Based on recent forecasts, DRP has potential to pay many enrolled producers in the first and second quarter of 2025, due to the recent price drop.

DMC + DRP

Both DMC and DRP can serve as important tools to help mitigate risk exposure for dairy operations. Given the high volatility and unique risks dairy producers often face, having multiple risk management solutions available is beneficial. By stacking DMC with DRP, producers can attain a more comprehensive safety net to help ride out tough markets.

Next Steps

Dairy producers interested in learning more about the DMC program are encouraged to reach out to their local FSA office prior to the March 31 deadline. You can also contact your Farm Credit East advisor and Crop Growers agent to discuss these risk management programs in more detail and determine if they are a good fit for your operation's strategy.

For those looking to explore DMC and DRP further, working with knowledgeable advisors is a crucial step. These professionals can provide the insights and guidance needed to effectively integrate these programs into a comprehensive risk management strategy, ensuring that dairy farms can thrive even in the face of uncertainty. Contact your local Crop Growers agent or our Dairy and Livestock Risk Management Specialists to learn more about the DMC and DRP program and how it can help protect the revenue of your operation.

Contact Crop Growers Today

Farm Credit East recently hosted a webinar with Christopher Wolf, of Cornell University, to provide a 2025 Dairy Industry Outlook. To dive deeper into the above risk management tools and industry trends, review the webinar recording along with the presenter’s PowerPoint slides, or read the 2025 Dairy Industry Outlook. 

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