DAIRY-RP FAQ

Dairy Revenue Protection (Dairy-RP) provides protection against an unexpected decline in revenue (yield and/or price) on the milk produced from dairy cows. In sum, the policy covers the difference between your final revenue guarantee and actual milk revenue during each quarter of the year.

The final revenue guarantee is based on expected yield multiplied by expected price along with the coverage level selected. Expected milk yields are based on state-level National Agricultural Statistics Service (NASS) estimates of milk production per cow in the pooled production region. Growers will have several options to choose from for the expected milk price. The default option will be futures prices. Other options will allow growers to insure the price for specific milk components, such as protein and fat. This is intended to allow producers to choose coverage that better matches their specific risks.

There are two pricing options available: the Class Pricing Option and the Component Pricing Option.

The Class Pricing Option uses an insured’s election of 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. The insured selects the declared butterfat test and declared protein test and the other solids test is fixed at 5.7 to establish the milk price.

The final revenue guarantee is determined by multiplying the expected Class III and Class IV prices x the declared pricing elections x covered milk production ÷ 100.

The final revenue guarantee is determined by multiplying the expected butterfat, protein and other solids prices x the final component tests x covered milk production ÷ 100.

The actual value is determined by multiplying the actual Class III and Class IV prices x the declared pricing elections x covered milk production x yield adjustment factor ÷ 100.

The actual value is determined by multiplying the actual butterfat, protein and other solids prices x the final component tests x covered milk production x yield adjustment factor ÷ 100.

Yes. You may choose either pricing option on separate quarterly coverage endorsement provided it is not covering the same milk.

An endorsement to the policy necessary to provide coverage that includes information about the quarterly insurance period and declared coverage options.

Yes. There can be multiple quarterly coverage endorsements in effect for the same quarter. The producer can elect different coverage levels and pricing methods for each quarterly coverage endorsement.

The three-month period, corresponding to one of the eight quarters available for purchase during the crop year.

Dairy-RP provides insurance only for the difference between the final revenue guarantee and actual milk revenue multiplied by actual share and protection factor, caused by natural occurrences in market prices and yields in the pooled production region.

The actual share is the percentage of milk owned by the producer covering said milk.

Producers have the option to buy additional protection coverage through a protection factor. The protection factor does not increase the final revenue guarantee but is applied to the expected revenue for the purposes of calculating a producer premium. If an indemnity is earned on the policy, the protection factor is also applied to an indemnity to determine the final indemnity payment. The protection factor may range from 1.0 to 1.5 in 0.05 increments.

A pooled production region is a group of states used to determine the milk production per cow within a region identified in the Dairy Revenue Protection Commodity Exchange Endorsement.

Dairy-RP premium subsidy is as follows:

Yes, you may have different coverage levels and protection factors for every endorsement purchased. You can choose a protection factor between 1.00 and 1.5 in 0.05 increments.

Premium is payable at the end of the Quarterly Insurance Period.

No, this policy does not insure against the death or other loss or destruction of your dairy cattle, or against any other loss or damage of any kind whatsoever.

No. Dairy-RP does not have a CAT level of coverage.

Yes. The subsidy for qualifying beginning farmers or ranchers provides an additional 10 percent of premium subsidy. For more information on the beginning farmer and rancher program, go to the Risk Management Agency’s website.

Yes, dairy producers may have LGM-Dairy and Dairy-RP policies in effect for the same crop year, but only one policy, either LGM-Dairy or Dairy-RP can have endorsements in effect for the quarterly insurance period. For example, if a Dairy-RP policy and LGM-Dairy policy are both insuring the same milk for the same quarterly insurance period, the policy with the earliest date of endorsement for the quarterly insurance period will be in force and the other endorsement will be void.

Yes, dairy producers may participate in both Dairy-RP and DMC simultaneously and on the same pounds of production, consistent with MPP-Dairy.

Dairy-RP has no caps on volumes or payouts and can be used by dairies large and small in all fifty states to cover up to 100% of their milk production volumes. In comparison, LGM-Dairy is capped at 24 million pounds per marketing year while DMC is a bifurcated program based on production history, with premiums increasing substantially at higher margin coverage levels for annual production levels of five million pounds and greater.

Dairy-RP premiums will change based on the risk environment however premiums are actuarially appropriate and subsidies range from 44%-59% based on the desired level of coverage selected. In contrast, LGM-Dairy subsidies range from 18%-50%, with policies being paid out based on an income-over-feed margin. DMC payouts are also based on an income-over-feed margin and premiums at higher margin coverage levels increase substantially for annual production histories greater than five million pounds.

Dairy-RP is available for purchase every business day when the coverage prices and rates are validated and published on the USDA RMA website. In contrast, LGM-Dairy is available once per month, typically on the last Friday of each month, while DMC is an annual decision, with an option to maintain coverage decisions through the entirety of the 2018 farm bill.

The crop year is July 1 through June 30.

The contract change date is April 30. This is the date changes to the policy, if any, can be viewed on RMA’s website for the upcoming crop year.

The cancellation date is June 30.

No, quarterly coverage endorsement must be purchased with the same AIP within the same crop year. You may transfer the policy to another AIP at the beginning of a new crop year.

Dairy-RP is available for purchase from your local livestock insurance agent. You can find a crop insurance agent using the Agent Locator tool on the Risk Management Agency (RMA) website.

Dairy-RP insurance is only available through an authorized crop insurance agent like Atten Babler Insurance Services. We can help you can fill out an application at any time. However, insurance does not attach until you buy a quarterly coverage endorsement. You may buy multiple quarterly coverage endorsements with one application. Your insurance coverage starts the first day of the quarter for which the quarterly coverage endorsement was purchased.

Give us a call at 800-884-8290 or CONTACT US today with more information about your operation.