Dairy Producers To Receive Refund Up To 75% Of MPP Under New Farm Bill

Under the 2018 farm bill, dairy producers will receive a refund up to 75% of Margin Protection Program (MPP) premiums paid from 2014 to 2017, excluding administrative fees.

“Due to the low frequency of program payments, total program payments made to dairy farmers during this time are estimated at less than $12 million – resulting in an aggregate loss ratio of less than one-sixth of 1%,” says John Newton, chief economist at American Farm Bureau Federation. He adds that farmers will receive a refund of up to 75% of premiums. “Based on estimates of premiums paid into the program and program payments, up to $60 million dollars are likely eligible for premium refunds.

Premiums paid for 2018 coverage – post-Bipartisan Budget Act improvements – are nonrefundable.

The premium repayments will be distributed in one of two ways: a farmer can receive 50% of the repayment as a direct cash repayment, or a farmer can receive 75% of the repayment as a credit toward Dairy Margin Coverage for the 2019 to 2023 coverage years, Newton explains.

He encourages producers to consider the total amount of the potential refund compared to the cost of DMC coverage over the five-year life of the farm bill.

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