Dairy Revenue Protection (Dairy-RP) is a concept plan of insurance, developed by AFBF, American Farm Bureau Insurance Services and other collaborators which would allow dairy farmers to purchase risk management protection against declines in quarterly revenue from milk sales, i.e. unexpected declines in milk prices, unexpected declines in milk production or both.
To accurately capture the farm-level revenue risk, dairy farmers will determine how their milk is priced under the policy by selecting to use a classified milk price or a combination of the milk components in their milk (milkfat, protein and other milk solids). Dairy-RP would function similarly to crop revenue protection polices in that the revenue guarantee would be based on futures prices, expected production, and market-implied risk, and would be priced using actuarially appropriate methods.
The concept plan has been presented to the Federal Crop Insurance Corporation for approval to be offered to dairy producers. A survey for dairy farmers to provide input into product development is available online at www.farmbureausellscropinsurance.com.