Dairy Revenue Protection (DRP) is designed to insure against unexpected declines in the quarterly revenue from milk sales relative to a guaranteed coverage level. The expected revenue is based on futures prices for milk and dairy commodities and the amount of covered milk production elected by the dairy producer. The covered milk production is indexed to the state or region where the dairy producer is located.
DRP offers two revenue pricing options:
- The Class Pricing Option uses a combination of Class III and Class IV milk prices as a basis for determining coverage and indemnities.
- The Component Pricing Option uses the component milk prices for butterfat, protein and other solids as a basis for determining coverage and indemnities. Under this option you may select the butterfat test percentage and protein test percentage to establish your insured milk price.
DRP policies function similar to crop revenue protection policies in that the revenue guarantee would be based on futures prices, expected production and market-implied risk.
Dairy Revenue Protection policies allow coverage levels from 70 percent to 95 percent of your expected quarterly revenue in five percent increments.
It is tailored to each individual operation by allowing the producer to choose:
- Value of Milk
- Amount of Milk Coverage
- Level of Coverage
- Which quarterly contracts to purchase
- Protection Factor, used for premium and indemnity calculations
The Dairy-RP policy provides insurance for the difference between the final revenue guarantee and actual milk revenue, times your actual share and protection factor. This loss needs to be caused by natural occurrences in market prices and yields in your state-level or pooled production region. This policy does not insure against the death or other loss or destruction of your dairy cattle.
DRP is approved for sale in all counties in all 50 states.
To learn more information or to discuss coverage options and an application for coverage, please contact an ABIS crop insurance agent.
Mankato: Mankato@cropinsurance.com, (800) 767-7110
West Des Moines: firstname.lastname@example.org , (844)244-7467