A tight January for milk margins

Happy new year, members. We'd love to open 2019 with nothing but good news, but the honest read on
January is that it's a tight month to be milking cows or buying their output. Early indications put
the feed-cost margin at its narrowest point in several seasons, and the new federal dairy safety net
that's supposed to help is not yet open for business.

What's actually happening

The 2018 farm bill replaced the old Margin Protection Program with something called Dairy Margin
Coverage, and it's written to apply retroactively to January 1 of this year. That's the good part.
The less good part is that sign-up isn't open yet, so any payment for this month's thin margin is
months away at best. If you produce or buy milk on contract, budget as though January's numbers are
what you'll live with for a while, not as though help is imminent.

Layered on top of that: the partial federal government shutdown that started in late December has
closed local Farm Service Agency offices. For a lot of our producer members, that office is where
farm operating loans get approved, where guarantees get processed, and where paperwork tied to
last year's disaster assistance gets signed off. With those doors closed, loan decisions that
would normally clear in weeks are sitting untouched. If your operation has an FSA loan application
or a guarantee in the pipeline, expect delay, and don't assume no news is bad news — it may just be
no one's there to give you news at all.

What we're watching for members

None of this is a crisis by itself. Thin margins and slow federal paperwork are both things the
dairy business has weathered before. But the combination — low margins and a support program
that isn't running yet and the office that handles loans being short-staffed — is worth flagging
early rather than after it's compounded.

If you're a producer member carrying feed-cost exposure, talk to your lender about bridge financing
options before you need them, not after. If you're a buyer or distributor member, expect some of
your smaller suppliers to be cautious about commitments this quarter. And if you've got a specific
FSA-related question, our Membership & Outreach Committee has been fielding a few of these calls
already this week and can point you toward what's known.

"We've just stopped calling the local office and started calling each other," one Midwestern
farmstead producer told us this week, describing how a handful of nearby creameries have been
comparing notes on loan timing instead of waiting on a callback. It's not a substitute for a working
federal office, but it's a reasonable stopgap, and it's exactly the kind of member-to-member
problem-solving we'd like to hear more about.

We'll keep this page updated as the sign-up window for the new margin program opens and as the
shutdown situation resolves. In the meantime: hang in there, and let us know what you're seeing on
the ground. It helps us represent the membership accurately when we're in front of anyone who asks.

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The International Cheese Federation (ICF) and More Cheese are entirely fictional. This post is demonstration content created for MemberJunction. All people, organizations, events, courses, certifications, figures, and quotations in it are invented, and nothing here represents a real association, a real business, a real person, or real professional advice.