Dairy Revenue Protection
Dairy Revenue Protection (Dairy-RP) is designed to insure against unexpected declines in the quarterly revenue from milk sales relative to a guaranteed coverage level. The expected revenue is based on futures prices for milk and dairy commodities and the amount of covered milk production elected by the dairy producer. The covered milk production is indexed to the state or region where the dairy producer is located.
Dairy-RP offers two revenue pricing options:
- The Class Pricing Option uses 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. Under this option you may select the butterfat test percentage and protein test percentage to establish your insured milk price.
You may cover 70 percent to 95 percent of your expected quarterly revenue in five percent increments.
A premium subsidy is available and is based on the coverage level selected.
Coverage is established by adding quarterly coverage endorsements to the policy. The sales period begins each day when the coverage prices and rates are validated and published on RMA’s website by 4:00 PM Central time and ends at 9:00 AM Central time of the following business day in which you can purchase quarterly endorsements.
If expected milk and dairy commodity prices are not available on the RMA website by 4:00 PM, then Dairy-RP will not be offered for sale for the insurance period.
Dairy-RP will not be sold on days where the monthly USDA Milk Production, Dairy Products, and Cold Storage reports are released. Milk or dairy commodity prices that experience a limit up or down move in the futures markets will not be available for determining the quarterly expected revenue.
The Quarterly Coverage Endorsements correspond to the eight quarterly insurance periods available for purchase during the crop year. Producers may purchase coverage up to five nearby quarters and have multiple endorsements for the same quarterly insurance period.
The actual ending milk or component values are based upon the monthly average prices announced by USDA’s Agricultural Marketing Service. Actual ending values are posted on RMA’s website at the end of the insurance period. The milk yields are based upon USDA’s National Agricultural Statistics Service Milk Production report.
Dairy-RP provides insurance only for the difference between the final revenue guarantee and actual milk revenue, times actual share and protection factor, caused by natural occurrences in market prices and yields in the pooled production region. Dairy-RP does not insure against:
- Death of dairy cattle;
- Other loss or destruction of your dairy cattle; or
- Any other loss or damage of any kind whatsoever.
Risk Management Agency Fact Sheet