New insurance service should help dairy farmers
“The number of dairies that have been forced to close or sell to larger operations is shocking,” noted American Farm Bureau Federation President Zippy Duvall. “We have always known revenue protection insurance could help farmers weather this storm, but no one offered it. That’s why American Farm Bureau Insurance Services is stepping up and rolling out this insurance now, when the need is so great.”
Since 2014, the annual average U.S. all-milk price has fallen by more than 30 percent, according to AFBF Economist Dr. John Newton. This year, it’s projected to be at the lowest level since 2009.
That’s why some sort of help is needed. AFBIS’ Dairy Revenue Protection insurance policy will be available in early October. Developed by Newton in partnership with AFBIS and economists from the University of Minnesota and Cornell University, it fills a demand not met by previous products.
“Dairy farmers have been asking for this type of risk management tool for some time,” said Tony Banks, commodity marketing specialist for the Virginia Farm Bureau Federation. “Dairy farmers provided input for the development of this new policy.”
The revenue protection provides insurance for the difference between the final revenue guarantee and actual milk revenue if prices or revenues decline.
It also provides a greater choice of price risk management features, providing the ability to protect the value of milk based on the value of cheese to fresh milk, protein or butterfat.
Yield adjustments factors will be calculated for Virginia and the nation’s other 22 major dairy states.
Dairy farmers can apply for the insurance starting Oct. 9. Applications are available at dairyrp.com.
Dairy Revenue Protection was developed and approved through the Federal Crop Insurance Act’s 508(h) process, which allows private parties to develop insurance products that are in the best interests of producers.
According to Newton, “the success of federal insurance programs is well-documented.” In recent years, nearly 90 percent of all corn, wheat, soybean, cotton and rice acres were protected by a revenue-based insurance policy. In addition to field crops, insurance policies covering risk are available for cattle, swine and lamb producers.