The Margin Protection Program for Dairy Farmers

Dairy farming is economically unique among major farm sectors because profitability depends on the spread between milk prices and feed costs, not just the price of a single commodity. USDA's Dairy Margin Coverage (DMC) program — formerly the Margin Protection Program — addresses this directly.

How DMC works

DMC pays when the national average dairy margin (the "all-milk price" minus a feed cost index) falls below a threshold that the dairy producer selects at enrollment. Producers can choose coverage from $4.00 to $9.50 per hundredweight of milk. Higher coverage levels cost more in premiums, but pay more when margins are tight.

Who participates

Enrollment in DMC is voluntary and widespread among US dairy operations. Small and mid-sized dairies (under 5 million pounds of production history) receive a premium subsidy that makes coverage nearly free for the first tier of production. Larger operations pay higher premiums on excess production history.

Payment triggers

When milk prices fall and/or feed costs rise, the margin can compress rapidly. The 2019–2020 period saw significant DMC payments when both conditions occurred simultaneously. COVID-related market disruptions in spring 2020 triggered substantial payments across the major dairy states.

Major dairy states

Wisconsin and California are the two largest dairy states by milk production, but the upper Midwest (Minnesota, Michigan, New York, Pennsylvania) also has significant dairy sectors that benefit from DMC in tight-margin years. Wisconsin's state page and Minnesota's state page include DMC payments in their annual program breakdowns.