New insurance product to provide some relief to dairy farmers

New insurance product to provide some relief to dairy farmers
RICHMOND—A new insurance product created to provide some relief to dairy farmers is on sale now.

“The Dairy Revenue Protection went on sale in October,” explained Tony Banks, a commodity marketing specialist for Virginia Farm Bureau Federation. Virginia Farm Bureau Crop Insurance is selling Dairy-RP, a federal crop insurance product.

“This is the first dairy revenue protection product available to dairy farmers,” Banks added. “Other federal risk management tools are intended to manage milk margin. But unlike other risk management tools, this product can be tailored for milk pricing and production conditions present in Virginia.”

Dairy-RP is an area-based insurance product designed to protect against quarterly declines in revenue from milk sales. The program recognizes that every farmer in the U.S. is paid a different price for milk. Dairy-RP is unique in its ability to closely match farm-level milk price risk by providing milk pricing options based on either classified milk prices or the value of the components in the milk, such as butterfat and protein.

Recognizing the need to enhance the federal risk management tools available to dairy producers, the American Farm Bureau Federation, American Farm Bureau Insurance Services and other groups developed Dairy Revenue Protection.

“In Virginia alone we lose about five dairy farms per month,” Banks said. “Not only that, but the dairy farmers who remain in business are continuing to lose money each month as farm milk prices remain significantly depressed.”

Since 2014, the annual average U.S. all-milk price has fallen by more than 30 percent. For 2018 it is projected to be at the lowest level since 2009, at $16.10 per hundredweight. Milk prices are projected to improve slightly in 2019 to $16.75 per hundredweight, but ongoing trade tensions have compelled the U.S. Department of Agriculture to push its 2019 milk price projection down by 45 cents per hundredweight. This 45-cent revision represents a nearly $1 billion decline in projected milk revenue in just one month in 2019.

Media: Contact Banks at 804-290-1114.

Support Virginia Agriculture

Join Now

Related Articles

Get Recognized

If your publication or radio or television station is delivering stellar coverage of agriculture on an ongoing basis, this is the award competition to enter. Learn More