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Farm Bureau developing dairy revenue insurance program

The nation’s largest farmer member organization is developing a new type of commercial dairy insurance that would offer revenue protections from declining market prices.

Dr. John Newton is Director of Market Intelligence for the American Farm Bureau Federation.

“Dairy producers saw their milk prices decline by nearly 50 percent in 2015 and there wasn’t really a government sponsored safety-net that provided exclusive coverage on the value of the milk that they produced,” says Newton.

He tells Brownfield while there are insurance programs such as the Dairy Margin Protection Program and the Livestock Gross Margin program, they don’t address price decreases.

“Both of those programs protect a margin, which is the difference between milk prices and feed prices. A lot of growers across the United States that home grow a lot of their feed don’t really need the Margin Protection or LGM Protection programs,” says Newton.

Under the proposed plan, insurance contracts would be quarterly, and could be purchased up to 15 months out. Dairy farmers would have three choices to make:

• A milk price blend between Class III and Class IV
• Number of cows to be covered
• Coverage level (from 60 to 90% of the revenue guarantee)

Production per cow would be based on each states milk production numbers as reported by USDA.

Newton says the Farm Bureau program would supplement current options available to all farmers and give them more choices to manage risk. The American Farm Bureau will submit the proposal to the Federal Crop Insurance Corporation in early April.

Dr. John Newton, Director Market Intelligence, American Farm Bureau Federation