Several questions have been raised in regard to how the USDA Risk Management Agency’s (RMA) Dairy Revenue Protection program (Dairy-RP) fits in with other risk management tools including the Farm Service Agency’s Margin Protection Program for Dairy (MPP-Dairy, renamed Dairy Margin Coverage (DMC) in the 2018 farm bill) and the USDA Risk Management Agency’s Livestock Gross Margin Insurance for Dairy Cattle (LGM-Dairy). Answers to several of the most commonly asked questions are provided below, updated with developments contained within the 2018 farm bill.
Can dairy producers participate in both Dairy-RP and DMC (previously known as MPP-Dairy)?
Yes, dairy producers may participate in both Dairy-RP and DMC simultaneously and on the same pounds of production, consistent with MPP-Dairy.
Can dairy producers participate in both Dairy-RP and LGM-Dairy?
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.
How do caps on volumes or payouts within Dairy-RP, DMC and LGM-Dairy compare?
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.
How does the pricing of Dairy-RP, DMC and LGM-Dairy compare?
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.
When are Dairy-RP, DMC and LGM-Dairy signups?
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.