Thursday, August 30, 2018

Any Double-Dipping on MFP

Still no FSA notice on the MFP, but there is a notice on the Dairy Margin Protection Program.  I have not kept up with program, but from the following Background paragraphs my guess is it's a revenue insurance type program, but run by FSA and not RMA.
"MPP-Dairy payments are triggered when the difference between the National all milk price and the National average feed cost (the margin) falls below the producer-selected margin trigger, ranging from $4 to $8, calculated monthly. USDA prices for milk and feed components required to determine the National average margin for July were released on August 29, 2018. The actual National average margin for July is $6.71815/cwt. As a result, dairy operations that elected margin coverage of $7.00, $7.50 and $8 will be issued a payment.
Payments for margins triggered will be issued directly to producers. MPP-Dairy payments issued will not be offset by premium balances due. The full balance of the premium is due September 28, 2018."
It raises the question to me, which I may have mentioned before, of whether there will be double-dipping under the MFP.  In other words, crop insurance has products, on which I'm not expert, which can cover loss of revenue from a base, a loss which might be caused by production losses and/or market price dips.  Producers have to sign up for such products and pay premiums.  MFP is essentially a free one-shot policy covering market price dips. So producers who signed up for the DMPP or a revenue crop insurance policy will receive two payments for the same loss.  That doesn't seem right, but from a program administration standpoint it immensely simplifies the operation.

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