Regional Implications for MPP-Dairy
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This study examines the impacts of the Margin Protection Program for Dairy Producers (MPP-Dairy) on the effective margins realized by dairy producers in various regions. The effects are examined for each selected margin ($4.00-$8.00 in $0.50 increments), and each percentage of production history (25%-90% in 5% increments). The “effective margins” are the regions’ actual margins as a function of their milk and feed prices having been added to the national net at each respective coverage level. The analysis simulated couplet margins for fifteen regions from 2017-2020. The results show that more than half of the regions have higher probabilities of triggering indemnities at every coverage level compared to the national. This means that if a regional policy of similar construction were available to producers, it might pay out more frequently. This study did find that the margin volatility was reduced over the whole period when the policy effects were accounted for.