Comparison of Potential Effects on the Profitability of the US MPP Application on Dairy Farms in Veneto (Italy) and Wielkopolska (Poland)

The American agricultural policy has introduced a form of insurance to guarantee the specific income for dairy producers called the Dairy Margin Protection Program. The program aims to protect farmers from the volatility of prices of both milk and production, without having distorting effects on the market. Joining the DMPP program is voluntary, but with the obligation to remain in the insurance system until the end of the program. The program ensures a share of the perceived income, chosen annually by the producer, of a quantity of reference milk assigned to the individual producer on a historical basis. The insurable theoretical income is defined monthly by the difference between the average milk price and the feed cost index calculated on the basis of a standard ratio. Farmers, who are members of the DMPP program, are entitled to compensation when the theoretical milk income is below the level of income coverage chosen by the producer for a two-month period. This work describes the operating mechanism of the US Dairy MPP with simulation in Veneto (Italy) and in Wielkolpolska (Poland) regions of costs that would have been incurred in the in the period from 2007 to 2017 and the effects on profitability of dairy farms. Finally, a comparison was made between the costs actually incurred by the Community agricultural policy in support of the milk sector and what would have cost a potential application of the MPP