On Friday, July 15, U.S. Senator for New York Kirsten Gillibrand released a letter to U.S. Secretary of Agriculture Thomas Vilsack. Therein, Sen. Gillibrand strongly advocated that USDA refund the unused portion of the approximately $73,000,000 collected from the U.S. dairy farmers that participated in USDA’s Dairy Margin Protection Program (DMPP) for the 2015 calendar year. The DMPP was initiated in the 2014 Farm Bill; it was supposed to serve as an improved milk-price safety net for U.S. dairy farmers. To date, even for a government program, it has been wildly unsuccessful.

Noting the dire straits New York dairymen find themselves in and alluding to the ineffectiveness of the DMPP, Gillibrand, the first New Yorker to serve on the Senate Agriculture Committee in 40 years, came right to the point: “Our dairy farmers are struggling. Some dairy farmers are unable to meet their debt obligations, and families are forced to sell off their herds, or are faced with the dilemma of having to make the decision between buying grain or groceries.” Her suggestion: “...returning a significant portion of these, (DMPP) premiums and fees originally paid by dairy producers would ease some of their financial strain. We must not hesitate to take swift action to aid the troubled dairy farmers of New York.”

The DMPP came into favor when the concept of “risk management” was a buzzword on the lips of every politician in Washington. As such, the DMPP was included in the 2014 Farm Bill with much fanfare and great expectation. It was supposed to replace the anemic and discredited Milk Income Loss Contract, (MILC) Program that had under-served as a price safety net for U.S. milk producers. Since its inception, the DMPP has been a dismal failure. In fiscal year 2015, U.S. dairy farmers paid over $73,000,000 to USDA to participate in the DMPP. Their return on this “investment”? Approximately $700,000—less 0.1 percent of their subscription cost. The remaining $72,000,000-plus was surrendered to the U.S. Treasury, making the DMPP a veritable cash cow for the Federal government. Gillibrand’s letter notes that this year only 48% of New York dairymen have even bothered signing up for the DMPP at any price level, and only .6%, or 14 farms, have received any resulting payment.

The DMPP risk management scheme was the ill-starred brainchild of the National Milk Producers Federation (NMPF), and was authored by them. At the time of DMPP adoption, NMPF was quick to claim paternity; now it is only just that blame for this epic failure be laid at NMPF’s feet. NMPF promotes itself as the spokesman for U.S. dairy farmers, but many dairymen do not subscribe to this, noting that among other controversial corporate members of the NMPF is Fonterra, the national dairy monopoly of New Zealand, a ferocious competitor of U.S. dairy farm interests. Many dairy farmers feel with questionable friends like the NMPF, their business interests don’t need anything more in the way of enemies. NMPF’s being the prime mover on the DMPP initiative only reinforces this perception.

In conclusion, Gillibrand told Sec. Vilsack that if he lacked the authority to refund DMPP funds, to work with her and other concerned senators to craft legislation to give him that authority. She pointed out: “The DMPP is not a traditional insurance program... but rather a government-backed risk management tool. Returning some of these premiums to producers during this period of difficulty would not unduly harm the ability of the DMPP to pay producers in the future.” Indeed, given the stingy DMPP payout record to date and the fact that USDA uses a price calculation figure approximately $2/cwt. higher than the actual price received by U.S. dairymen, any risk of future depleted DMPP funding seems far beyond unlikely.

[Nate Wilson is retired after a 40-year career as a dairy farmer in the hills of New York’s Chautauqua County. He currently is an associate editor and regular contributor to the national dairy industry monthly The Milkweed.]