Dairy Revenue Protection
Dairy Revenue Protection (DRP) is an insurance plan approved by the Federal Crop Insurance Corporation (FCIC) that allows dairy farmers to purchase risk management protection against declines in quarterly milk sales revenue as a result of a decline in milk prices, a decline in milk production, or both. Revenue will be determined by a producer selecting to base their coverage on a mix of Class III and Class IV milk (class) prices or milk component prices (butterfat, protein, and other milk solids). Coverage is based on quarterly revenue. The policy is sold on a daily basis and insures a quarter of milk production. Policies are offered by USDA-approved insurance providers and can be purchased voluntarily for an individual quarter or a series of quarters (up to five quarters into the future).
Livestock Gross Margin - Dairy
Livestock Gross Margin (LGM) – Dairy Cattle is a federally-reinsured livestock product that provides protection against the loss of gross margin (market value of milk less feed costs) on the targeted quantity of market milk. The LGM insurance policy uses futures prices to determine the expected gross margin and the actual gross margin. LGM does not insure against death, loss, unexpected decrease in milk production or unexpected increases in feed use. The mix of target milk marketings and target feed ratio allows a producer to select feed ratio and production levels that best reflect their actual production. This effectively insures the producer gross margin (difference between the gross margin guarantee and the actual gross margin at the end of the 11-month insurance period).