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UW ag economists lead effort to educate U.S. dairy farmers about new tools for managing price risk

University of Wisconsin-Madison dairy analysts are participating in a multi-state effort to develop educational tools to help U.S. dairy producers understand and make use of provisions in the new farm bill intended to provide a buffer when milk and feed prices take a wrong turn.

Everything needed to explain the dairy provisions in the Agricultural Act of 2014 should be in place before the first sign-up period is set this fall, says Mark Stephenson, a UW-Madison agricultural economist specializing in dairy markets and policy. The team effort to develop the educational programs is funded by a Farm Service Agency (FSA) grant.

The new farm bill represents a shift toward insurance-like protection instead of price supports or other direct subsidies, Stephenson says. Dairy farmers will be able to sign up for what is now called the Margin Protection Program (MPP), which offers them insurance based on an average US  dairy production margin—the difference between the U.S. All-milk price and average feed cost. Under the MPP, farmers would receive payments when that margin falls below a minimum insured margin per hundredweight for a two-month period.  These minimum margins can range from $4.00/cwt to $8.00/cwt (in 50ȼ increments).

All dairy operations are eligible to participate and will have different coverage options to choose from. Developing the tools needed to understand how to use the MPP is what Stephenson and his colleagues are now working on.

“In reality, we’ve been working on this for three years already, so it’s not like we’re starting from scratch,” he says.

“We’ll have a web-based Dairy Program Decision Tool that farmers can put in their own information and look at how the MPP affects their operations,” Stephenson says. “And before that, we’ll have developed ‘train the trainer’ materials for FSA personnel, county agents, cooperatives, consultants and others who work with farmers.”

The information will be delivered by classroom-style training and webinars. Before the signup begins, Stephenson plans a string of meetings with producers throughout Wisconsin.

Participating universities include: UW-Madison, University of Minnesota, University of Illinois, The Pennsylvania State University, Cornell University, The Ohio State University, and Michigan State University.

For more information, contact Mark Stephenson at (608) 890-3755 or; or Brain Gould at (608) 263-3212 or