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Title page 1

Contents 3

Highlights 2

Letter 5

Background 8

Most Dairy Farms Participate in the DMC Program, but Participation and Payments Vary by Dairy Farm Size and State, with Several Benefits Cited 11

Trends in DMC Program Participation 11

Trends in DMC Payments to Dairy Farmers 15

Benefits of Program Participation Cited by Farmer Groups 16

Dairy Farmer Groups Identified Challenges to DMC Participation, Including Program Awareness, but FSA Has Not Assessed Its Communication Efforts 17

Limits on Amount of Milk Covered by DMC 17

Cost of Buy-up Coverage 18

DMC Margin Calculations 18

Program Awareness 20

Conclusions 22

Recommendation for Executive Action 23

Agency Comments and Our Evaluation 23

Appendix I: Trends in the Number of Dairy Farms, Milk Production, Dairy Cows, and Dairy Cows by Herd Size 25

Appendix II: Objectives, Scope, and Methodology 29

Appendix III: Information on Two Other Selected USDA Dairy Programs 33

Appendix IV: USDA Dairy Margin Coverage Cost to Farmers at Various Milk Production and Coverage Levels 35

Appendix V: Agency Comments 37

Appendix VI: GAO Contact and Staff Acknowledgments 39

Tables 3

Table 1. Dairy Revenue Protection and Livestock Gross Margin for Dairy Cattle Payments to Dairy Farms, 2020-2023 34

Table 2. USDA Dairy Margin Coverage Program Annual Premiums and Cumulative Net Payments for Hypothetical Smaller and Larger Dairy Farms, 2019-2024 35

Figures 4

Figure 1. Options for Dairy Farmers When Selecting Level of U.S. Department of Agriculture (USDA) Dairy Margin Coverage (DMC) 9

Figure 2. Dairy Margin Coverage Premiums per Hundred Pounds of Milk Production 10

Figure 3. Number of Dairy Farms Participating in the U.S. Department of Agriculture (USDA) Dairy Margin Coverage (DMC) Program by Dairy Farm Size, 2019-2024 12

Figure 4. U.S. Department of Agriculture (USDA) Dairy Margin Coverage (DMC) Participation Rates by State, 2024 14

Figure 5. Net Payments to Dairy Farmers Participating in the U.S. Department of Agriculture (USDA) Dairy Margin Coverage (DMC) Program by Dairy Farm Size, 2019-2024 15

Figure 6. Decrease in Number of U.S. Dairy Farms by State, 2003-2024 26

Figure 7. Total U.S. Dairy Cows by Herd Size, 1997-2022 28

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