The 2014 Farm Bill created a new program for dairy producers to lock in certain margins for their operations. The margin was calculated as the difference between the National All Milk price and a feed factor based upon the price of corn, soybean meal and alfalfa hay. Producers could lock in margins between $4 per cwt (no premium would be owed) up to $8 per cwt in 50 cent increments. The vast majority of dairy producers elected the $4 per cwt coverage level for both 2014-2016. They could elect to cover between 25% and 90% of their margin.
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