Dairy Margin Coverage (DMC), Carry-Forward from H.R. 1
DMC tier expansions and updates were made in the 2025 budget reconciliation law (H.R. 1), not the 2026 farm bill. The 2026 farm bill does not modify DMC structure.
Why this page exists
Dairy Margin Coverage (DMC), the safety net program for dairy farmers, was substantially updated in H.R. 1, the 2025 budget reconciliation law. The 2026 farm bill does NOT make additional changes to DMC.
If you’re trying to understand current dairy safety net policy, you have to read H.R. 1 alongside the 2026 farm bill.
What DMC does
DMC provides margin protection for dairy farmers, payments when the difference between the all-milk price and average feed costs falls below selected coverage thresholds.
H.R. 1 changes (already in effect)
The 2025 reconciliation law:
- Extended DMC through 2031
- Adjusted feed cost calculation methodologies
- Modified premium rates and tiers
- Expanded “Tier 1” coverage thresholds for smaller operations
These changes are already in effect. They are NOT subject to additional 2026 farm bill action.
What the 2026 farm bill does for dairy
While DMC isn’t touched, the farm bill does change dairy in other ways:
- Dairy Forward Pricing Program made permanent
- Mandatory cost-of-production reporting required from processors
- Dairy Indemnity, Promotion, and Research Programs reauthorized
- Common name protection (relevant for U.S. cheese producers)
See Dairy Forward Pricing and Title I Commodities Pillar for details.
How to think about dairy policy in 2026
The “dairy safety net” now consists of:
- DMC (carry-forward from H.R. 1)
- Dairy Forward Pricing (made permanent in 2026 farm bill)
- Federal Milk Marketing Orders (no farm bill changes; ongoing USDA rulemaking)
- Mandatory cost reporting (new requirement that will eventually feed into FMMO make allowances)
Dairy farmers have to engage with all four to manage price and cost risk.