Relief for Dairy Farmers with Revenue Protection
We recently held our quarterly Federal Crop Insurance Corporation (FCIC) Board of Directors meeting. In my last blog, I talked about the goals of these meetings, one of which is modifying existing insurance policies to meet customer needs, particularly with the present challenges we face.Click to edit this placeholder text.
As a result of the meeting, we are taking several actions in response to the COVID-19 pandemic. Last week we authorized Approved Insurance Providers (AIPs) to extend the correction time period for acreage reports or other forms, extend the deadlines for payment of premiums and administrative fees, and defer the resulting accrual of interest. This week I’m proud to announce a change to Dairy Revenue Protection, or DRP, policies in response to the volatility of milk prices severely affecting the industry.
Dairy Revenue Protection has become popular with farmers. Since last year, DRP has grown from covering roughly 7% to 25% of all U.S. milk production. The DRP program is an excellent risk management tool for dairy producers, providing peace of mind during unpredictable market fluctuations such as the industry is experiencing now.
Unlike other USDA insurance programs, such as Dairy Margin Coverage (DMC) and Livestock Gross Margin (LGM), DRP insures against unexpected declines in quarterly revenue from milk sales. DMC and LGM are based on margin coverage – essentially milk price minus feed cost. DRP, on the other hand, addresses the gap in coverage by providing revenue and yield insurance. Farmers can participate in both DMC and DRP at the same time. Dairy producers can also purchase LGM and DRP policies together, but some restrictions apply.
Go to the RMA website for more information and explore what options might work best for you. Also try our agent locator tool to find an Approved Insurance Provider that can address specific questions you may have.
Martin Barbre is the Administrator for USDA’s Risk Management Agency. He has served as President of the National Corn Growers Association, a member of USDA’s Illinois Farm Service Agency State Committee, and is a long-time farmer from Carmi, Illinois.
Source: USDA RMA