Margin Protection Program for Dairy Producers: Implementation, Participation and Consequences

Marin Bozic, Christopher Wolf (), Fanda Yang, John Newton and Cameron S. Thraen

No 186728, 2014 AAEA: Crop Insurance and the 2014 Farm Bill Symposium: Implementing Change in U.S. Agricultural Policy, October 8-9, 2014, Louisville, KY from Agricultural and Applied Economics Association

Abstract: In the period leading up to the start of the Margin Protection Program for Dairy Producers (MPP-Dairy), a survey was undertaken to assess dairy farmer knowledge, attitudes, impressions and expected participation decisions. All surveys were collected in July and August 2014. There are six main conclusions of the survey. First, prior to the announcement of USDA rules regarding MPP-Dairy, most dairy producers felt they had ‘some knowledge’ of the program, with close to 30 percent declaring ‘no knowledge’ about the program. Second, about thirty percent of respondents had somewhat or very favorable impressions of MPP-Dairy while similar percent had somewhat or very unfavorable. Top four concerns about the program were too much government involvement, program complexity, lack of supply management and fear that the program would distort market signals to farmers. Third, close to 40 percent of producers indicated they were leaning towards registering for MPP-Dairy, while 30 percent were leaning against participation. Over 30 percent of producers had not decided if they would to participate or not. More knowledge about MPP-Dairy was associated with higher likelihood of participation. Fourth, we asked dairy farmers which coverage level they would choose in most years. Distribution of responses had two pronounced peaks, with $4.00/cwt and $6.00/cwt chosen by 28 and 25 percent of producers respectively. No other coverage choice was chosen by more than 12 percent of producers. Fifth, just under 70 percent of LGM-Dairy users indicated that when faced with a one-time irreversible choice between LGM-Dairy and MPP-Dairy, they would choose MPP-Dairy. Finally, just under 25 percent of producers indicated MPP-Dairy would ‘somewhat’ reduce their use of other risk management tools, while 18 percent replied they expected a ‘strong reduction’ in their use of other risk management instruments.

Keywords: Agricultural and Food Policy; Production Economics; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 20
Date: 2014-10
New Economics Papers: this item is included in nep-agr
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaeacj:186728

DOI: 10.22004/ag.econ.186728

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