The U.S. Agricultural Act of 2014 creates a new Margin Protection Program for Dairy (MPP-Dairy) under which dairy farmers can receive indemnity payments from the U.S. government if the margin falls below the insured level. The design of MPP-Dairy suggests that the program has the potential to weaken processes that would adjust milk production, prices and margins if the proportion of milk covered by insurance is large. This paper describes potential impacts of MPP-Dairy using a conceptual analysis (feedback loop diagram), then uses an empirical system dynamics (SD) commodity model for the U.S. dairy industry to assess the impacts quantitatively.