US to introduce dairy revenue protection

Published 20 August 18

A collaboration of US organisations (lead by the American Farm Bureau Insurance Services Inc.) are introducing a new insurance product for American dairy farmers, called Dairy Revenue Protection (DRP), on 9 October 2018. The DRP provides farmers with insurance for the difference between the revenue guarantee and the actual milk revenue, if prices or revenues decline.

The product is an area-based scheme allowing farmers to take quarterly coverage between 70 and 95% of revenue, which is sold daily. Farmers can take protection in one of two ways. Either by an average of USDA’s prices for Class 3 and 4 milk or based on constituents.

US dairy farmers currently have access to a Margin Protection Programme (MPP) and can use the new revenue protection alongside this, giving them more options around risk management. The MPP protects against declines in a national average income over feed cost margin.