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Dairy Revenue Protection

Cheese. Milk. Yogurt. To say that we here, at Scott Colville Crop Insurance, appreciate what your hard work provides is an understatement. To quote Scott himself: “It feels like I go through a gallon a day!”, so we know that by helping you cover your risks and increase your revenue, our families and communities benefit greatly! Our products and plans keep your herd going strong so you can keep providing Americans with the calcium they need to stay strong.

Check out some of our dairy revenue protection options below!

Dairy Revenue Protection

Cheese. Milk. Yogurt. To say that we here, at Scott Colville Crop Insurance, appreciate what your hard work provides is an understatement. To quote Scott himself: “It feels like I go through a gallon a day!”, so we know that by helping you cover your risks and increase your revenue, our families and communities benefit greatly! Our products and plans keep your herd going strong so you can keep providing Americans with the calcium they need to stay strong.

Check out some of our options below!

Availability

Dairy-RP is available in all counties in all 50 states.

Pricing Options

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.

Establishing Coverage

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 the RMA’s website by 4:30 p.m. Central Time, and ends at 9 a.m. 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 4:30 p.m., 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.

Quarterly Coverage Endorsements

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, as well as have multiple endorsements for the same quarterly insurance period.

Ending Milk Prices and Yield

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.

Causes of Loss

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
  • Any other loss or damage of any kind whatsoever

Quarterly Insurance Period

The quarterly insurance period contains the three-month periods corresponding to one of eight quarters for which coverage is available under the quarterly coverage endorsement. For example, the insurance period for the January 10 sales closing date contains the quarters of April through June, July through September, October through December, January through March, and April through June.

 

FAQ

 

How much does dairy insurance cost? 

It always depends on what plan you go with and what your needs are. We encourage farmers to buy their policy at the highest net revenue possible. The main thing dairy insurance price boils down to is whether you use class pricing or component pricing. If you choose component pricing, it depends on how the dairy processor measures the butter-fat and the protein in milk (the higher the butter fat and protein numbers are, the more the farmers get paid). Class pricing is offered as Class III pricing (mostly cheese) and Class IV pricing (mostly butter and powder). 

 

If I already have Dairy Margin Coverage, can I have both and Dairy 

The Farm Service Agency (FSA) offers Dairy Margin Coverage (DMC). The program we offer is called Dairy Revenue Protection (DRP). And yes, you can purchase both insurances, but you cannot insure the same milk twice. How does that work? Let’s say you have 100,000 pounds of milk; you can insure half with DMC and half with DRP. Let us get to know you and figure out what you need in your dairy margin coverage program. We’ll affordably tailor your coverage to your needs. 

 

How does the DRP differ from LGM? 

The DRP basically protects against a drop in the milk price. Livestock Growth Margin (LGM) is not based on the price of milk. LGM works more like the Dairy Margin Coverage in that it takes the value of the milk minus the feed costs (generally corn and soybean meal). It covers the margin, not just the price of milk. 

 

Is the Producer Price Differential (PPD) insuranced?

The short answer is no, but concerns about it are warranted and currently being heard by the Risk Management Agency (RMA), which oversees crop insurance. They are trying to find ways to ensure against negative PPD. We agree with farmers that take it seriously. Two years ago PPD would often go between a positive $1 to a negative $1, which was fairly common. But when COVID hit, the PPD went up to $6 – $8.  Farmers had to sell their milk for a loss, meaning a lot of hard-working farmers did everything right and still got a much smaller paycheck. Farmers deserve a lot of empathy for what they went through in 2020.

Availability

Dairy-RP is available in all counties in all 50 states.

Pricing Options

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.

Establishing Coverage

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 the RMA’s website by 4:30 p.m. Central Time, and ends at 9 a.m. 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 4:30 p.m., 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.

Quarterly Coverage Endorsements

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, as well as have multiple endorsements for the same quarterly insurance period.

Ending Milk Prices and Yield

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.

Causes of Loss

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
  • Any other loss or damage of any kind whatsoever

Quarterly Insurance Period

The quarterly insurance period contains the three-month periods corresponding to one of eight quarters for which coverage is available under the quarterly coverage endorsement. For example, the insurance period for the January 10 sales closing date contains the quarters of April through June, July through September, October through December, January through March, and April through June.

 

Availability

Dairy Revenue Protection is available in all counties in all 50 states.

Pricing Options

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.

Establishing Coverage

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 4:30 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 4:30 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.

Quarterly Coverage Endorsements

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.

Ending Milk Prices and Yield

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.

Causes of Loss

Dairy Revenue Protection 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 Revenue Protection does not insure against:

  • Death of dairy cattle
  • Other loss or destruction of your dairy cattle
  • Any other loss or damage of any kind whatsoever

Quarterly Insurance Period

The quarterly insurance period contains the three-month periods corresponding to one of eight quarters for which coverage is available under the quarterly coverage endorsement. For example, the insurance period for the January 10 sales closing date contains the quarters of April through June, July through September, October through December, January through March, and April through June.

 

FAQ

 

How much does dairy insurance cost? 

It always depends on what plan you go with and what your needs are. We encourage farmers to buy their policy at the highest net revenue possible. The main thing dairy insurance price boils down to is whether you use class pricing or component pricing. If you choose component pricing, it depends on how the dairy processor measures the butter-fat and the protein in milk (the higher the butter fat and protein numbers are, the more the farmers get paid). Class pricing is offered as Class III pricing (mostly cheese) and Class IV pricing (mostly butter and powder). 

 

If I already have Dairy Margin Coverage, can I have both and Dairy 

The Farm Service Agency (FSA) offers Dairy Margin Coverage (DMC). The program we offer is called Dairy Revenue Protection (DRP). And yes, you can purchase both insurances, but you cannot insure the same milk twice. How does that work? Let’s say you have 100,000 pounds of milk; you can insure half with DMC and half with DRP. Let us get to know you and figure out what you need in your dairy margin coverage program. We’ll affordably tailor your coverage to your needs. 

 

How does the DRP differ from LGM? 

The DRP basically protects against a drop in the milk price. Livestock Growth Margin (LGM) is not based on the price of milk. LGM works more like the Dairy Margin Coverage in that it takes the value of the milk minus the feed costs (generally corn and soybean meal). It covers the margin, not just the price of milk. 

 

 

Is the Producer Price Differential (PPD) insuranced?

The short answer is no, but concerns about it are warranted and currently being heard by the Risk Management Agency (RMA), which oversees crop insurance. They are trying to find ways to ensure against negative PPD. We agree with farmers that take it seriously. Two years ago PPD would often go between a positive $1 to a negative $1, which was fairly common. But when COVID hit, the PPD went up to $6 – $8.  Farmers had to sell their milk for a loss, meaning a lot of hard-working farmers did everything right and still got a much smaller paycheck. Farmers deserve a lot of empathy for what they went through in 2020.

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What’s Keeping You Up at Night?

Row

Fruit

Hemp

Livestock

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Fruit

Hemp

Livestock

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Mondays – Saturdays, 6:30am to 10:00pm

HERE FOR YOU AND YOURS

Mondays – Saturdays,
6:30am to 10:00pm

HERE FOR YOU AND YOURS

Mondays – Saturdays,
6:30am to 10:00pm