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What You Need to Know About Dairy Revenue Protection
Protect your dairy revenue against unexpected declines in milk prices and production with the Dairy Revenue Protection Program.
Covered Dairy Risks
The Dairy Revenue Protection Program (DRP) is designed to help dairy farmers address some of the biggest risks they have in their operations, particularly milk price and production variability. This program protects against unexpected declines in quarterly revenue from milk sales due to unexpected declines in milk prices and/or milk production.
How It Works
Local coverage can be purchased on a quarterly basis – the policy can be purchased for one quarter, or a strip of quarters, up to five quarters out. The cost of the policy will depend on the expected risk in the market as well as parameters selected by the farmer. There is a premium discount or subsidy from the USDA based on the coverage level selected.
Farmers will be paid a policy indemnity at the end of the covered quarter if the state-indexed actual revenue is below the revenue guarantee stated on the policy. This revenue guarantee is based on future milk prices, expected production, and market-implied risk. The revenue guarantee is determined at the time the policy is purchased by the farmer. If the state-indexed actual revenue is above the revenue guarantee, the farmer only pays the policy premium.
DRP is approved for sale in all 50 states. This is a great alternative to the current Dairy Margin Protection Policy (MPP).
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