Risk insurance programme protects US farmers from 'catastrophic' dips
Published 11/05/2016 | 02:30
Irish dairy farmers have been urged to turn State-side to see volatility measures at work.
Even though US milk producers haven't felt the extent of the pain of European and New Zealand farmers in recent months due to the low grain prices, they still have a risk insurance programme in action to help protect against the worst troughs.
Jim Mulhern, chief executive of the US National Milk Producers Federation (NMPF), said the dairy margin insurance programme was introduced in the US under a Farm Bill following the lows of 2008/2009.
"Prices were so low at that time they forced a lot of farmers out of business and washed billions of dollars off the balance sheet," he said.
"We developed a risk insurance programme that allows farmers to buy supplemental coverage from the government to protect them if prices drop below a certain level."
Mr Mulhern, who was addressing a volatility conference staged by the Ulster Farmers Union and Dairy UK, said it was not designed to enhance income or to interfere in the markets by encouraging production.
It is designed to protect the margin between the cost of feed and milk price.
"What we call the basic level, or the catastrophic level of coverage would kick in at US 9c/kg and farmers can buy coverage up to 18c/kg," he said. The cost increases as you buy higher coverage. He said it was designed to take the "bottom off of a trough" and the sign up was high in 2015.