The first draft of the highly anticipated House farm bill contains big changes to the Dairy Margin Coverage program, a change to the Class I mover, and it would allow schools to offer whole milk in schools.

Here are more details from the official draft released earlier Friday by the House Agriculture Committee:

DMC changes

Revert to higher-of Class I

One of the least publicized aspects of the 2018 Farm Bill was the change of the Class I mover to the average of Class III and IV, plus 74 cents.

The House farm bill draft now reverts it back to the “higher-of” Class III or IV formula, something Rep. Glenn “GT” Thompson, R-Pa., chairman of the committee, has supported, calling the previous change a mistake and something that has led to lower milk prices to dairy producers.

The House farm bill draft also mandates biennial cost surveys to ensure make allowances accurately reflect the cost of manufacturing dairy products.

Whole milk in schools

Toward the end of the 942-page draft, under the Miscellaneous Provisions title, there is a provision that allows schools participating in the National School Lunch Program to once again offer whole milk.

Allowing whole milk in schools got a big boost in December when the House passed the “Whole Milk for Healthy Kids Act,” sponsored by Thompson and others.

Right now, schools in the National School Lunch Program must offer milk that aligns with the latest Dietary Guidelines for Americans. According to existing USDA regulations, only fat-free or low-fat milk is permissible, and it can be either flavored or unflavored. 

The release of the farm draft follows an active week for dairy news in the region, particularly in Pennsylvania.

According to a report by Spotlight PA State College, the proposed state budget by Gov. Josh Shapiro includes $5.6 million to create a state subsidy that would lessen sign-up costs for the federal Dairy Margin Coverage Protection Program, which gives farmers direct payments to help them deal with volatile milk and feed prices.

DMC is a voluntary risk management program that offers protection to producers when the difference between the all-milk price and the average feed price falls below a certain dollar amount selected by the producer. Last year, DMC payments were triggered in 11 months, including in June and July when the margin fell below the catastrophic level of $4 per cwt.

Nationwide, 74.3% of dairies enrolled in DMC in 2023 with a payment of $75,668. Northeast farms have historically lagged in enrollment, but that gap has closed in recent years.

Last year, 71.4% of Pennsylvania farms, or 1,778 operations, enrolled in the program. New York had 73%, or 1,820 operations, enrolled; Ohio had 75.5%, or 695 operations, enrolled; and Vermont had 76.3%, or 429 operations, enrolled. Michigan had the lowest percentage of farms enrolled, 66%, or 643 operations.

The Farm Service Agency revised DMC regulations for dairy operations with less 5 million pounds of production, allowing producers to establish one adjusted base production to better reflect current production.