Five weeks left on the safety net

We've had a handful of calls this month from members asking the same question in different words: is it too late to sign up for the current milk-margin coverage program. It isn't, not yet, but the window is narrower than it looks than most people assume. Enrollment for this year's coverage runs into next month, and the office handling applications is already telling people not to wait for the last week to file.

For members who buy milk rather than produce it, this can feel like someone else's paperwork. It isn't. When a farmstead or co-op supplier decides whether to carry a milk price increase into their wholesale contracts this fall, that decision runs partly through whether they're covered if the margin between milk and feed costs turns against them again. A cheesemaker who knows their supplier is protected has a steadier number to plan a fall price list around, and a distributor negotiating a September contract benefits from knowing which of their producers are carrying that protection and which are going in bare.

Where the margin sits right now

Class III milk has climbed from a rough start to the year — it was under $14 in February — up into the high sixteens and low seventeens through the summer. That's the number cheese plants pay against, and it's meaningfully better than 2018. It's also not so comfortable that anyone we've talked to is skipping the coverage decision this year. Feed costs move independently of milk prices, and the whole point of a margin program is that it doesn't matter which side moves against you first; a strong milk price with a bad corn year can erase the gain just as easily as a weak milk price can.

Cow numbers have also been drifting down nationally since early last year, which is a slower story but the one worth watching into 2020: fewer cows eventually means a tighter milk supply, and tighter supply is usually where cheese prices firm up the most. That's good news for members selling finished wheels and blocks, and a reason to expect the margin conversation to keep mattering even after this particular enrollment window closes.

Enrollment isn't automatic and it isn't free to skip lightly. A producer chooses a coverage level for the year, pays a modest premium tied to that level, and then receives a payment automatically whenever the calculated national margin drops below the chosen threshold in a given month. Several members who signed up early this summer told us the paperwork itself took less than an hour once they had their production history in hand — the harder part was deciding how much coverage to buy, not filling out the form.

What we're asking members to do this week

If you or your supplying producer haven't made a coverage decision for this year, that's the task for this week, not next month. Talk to whoever handles your farm's or your supplier's federal program paperwork, and don't assume the decision made last year still applies — coverage elections don't automatically carry forward the way some crop programs do, and missing the deadline means waiting for the next signup cycle with no coverage in between.

For members further down the supply chain — distributors, retailers, cheesemongers — the useful move is simpler: ask your suppliers where they stand. A supplier who's covered is a supplier whose price to you is less likely to move suddenly if the fall margin turns unfavorable. That's a five-minute conversation now that can save a re-negotiated contract in November.

The Membership & Outreach Committee has been fielding questions on this all summer and can point you to the right federal contacts if you're not sure where to start, or help you think through what level of coverage actually matches your risk.

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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.