University dishes lessons on the latest Farm Bill

The University Extension will host dairy education seminars beginning Monday.

Zoe DiCicco

Nearly a half-century ago, Garrett Luthens’ family dairy farm in rural Minnesota began as a small operation with only seven cows.

Now, the Hutchinson, Minn., farm, Skyview Dairy, is home to nearly 1,200 dairy cows, producing about 75 pounds of milk each day.

Dairy farmers with large productions, like the Luthens family, will soon see big changes in how they’re protected financially with a new program that’s included in the 2014 Farm Bill. But for some Minnesota farmers, it’s unclear how the upcoming changes will play out.

To help ease farm owners into changes prompted by the Agricultural Act of 2014,  commonly referred to as the Farm Bill, the University of Minnesota Extension is partnering with the Farm Service Agency of the United States Department of Agriculture to host dairy education seminars throughout the state starting next week.

The seminars will specifically focus on the Dairy Margin Protection Program, a new component of the Farm Bill, which farmers can sign up for until the end of November.

The Dairy Margin Protection Program is an optional safety net where farmers receive payments when the difference between the national price of milk and the average cost of feed goes below a level selected by the producers, according to the University Extension website.

The new program aims to reduce dairy producers’ risk of large losses, whereas language in the former Farm Bill included programs that paid farmers when milk prices dropped below the farmer’s standard revenue.

“[The program] should be a better fit for us than what we’re currently under,” Luthens said.

Kevin Klair, an extension economist for the University’s Center for Farm Financial Management, said the latest Farm Bill and its new dairy protection program is in line with the transition from a program that operated with reimbursements to one that offers pre-emptive help.

“The support for milk prices is insufficient and increasingly irrelevant because problems in the dairy sector may originate from high feed prices,” said Marin Bozic, dairy foods marketing economics assistant professor in the department of applied economics.

The Farm Bill is split into categories and will cost an estimated $489 billion total over the next five years. The margin protection program falls under the “commodities” section, which consumes about $24 billion of the nearly $500 billion.

The bill does not include any free safety nets, Bozic said, and dairy producers will have to pay a premium to receive insurance from the margin protection program.

“They can find the program will not reduce their profits a lot in a good year, and it can help them a lot should next year be a bad one,” he said.

Every land-grant university — which includes the University of Minnesota — currently has a contract with the USDA, which Klair said requires those institutions to deliver education on the 2014 Farm Bill.

Congress implemented funds for extension programs this year to finance Farm Bill education, Klair said.

“Extension, historically, has been one of the Farm Bill leaders in education,” he said.

It’s important to educate dairy producers on the new bill and changes it implements, Bozic said, because those farmers contribute billions of dollars to Minnesota’s economy each year.

In 2012, Minnesota exported $243 million in dairy products, according to the Minnesota Department of Agriculture.

“Dairy producers are looking to [the] University of Minnesota for leadership in educating them so they can understand the new programs,” Bozic said.

Once the set of dairy education seminars finish, Klair said the University Extension will begin a crop education series.

Along with helping develop material for the University Extension’s meetings, Bozic is also educating dairy producers on the new program through a series of meetings with the Minnesota Milk Producers Association. He said he is expecting to reach out to about 1,000 dairy producers.

Luthens said he will attend one of the upcoming MMPA meetings to improve his understanding of how the changes in the Farm Bill will directly affect him.

He said Skyview is currently using the Livestock Gross Margin dairy insurance program, which is another form of government risk management for farmers.

But Luthens said he believes the new programs offered by the bill will provide him with a better safety net.

He said he’s been following the legislation and believes it will be better for dairy producers overall.

“It’s a tool in their toolbox to help them,” Luthens said.