New Dairy Revenue Protection decision tool and premium calculator available online | Michigan Farm News

New Dairy Revenue Protection decision tool and premium calculator available online

Category: Livestock

by Farm News Media


American Farm Bureau Insurance Services Inc. has launched a new free decision tool to help dairy farmers make insurance coverage decisions for Dairy Revenue Protection (DRP) insurance product. According to Janna Fritz, crop insurance manager for Farm Bureau Insurance of Michigan, dairy producers interested in accessing the online tool should contact a Farm Bureau Insurance Crop Insurance Specialist to learn more about setting up a free online account.

In addition to setting up free access, crop insurance specialists will assist producers on how to use the online tool to receive timely dairy pricing updates, review protection levels, get premium quotes and perform “what if analysis” to see how DRP would function for their dairy operation.

“DRP provides insurance for the difference between the revenue guarantee and actual milk revenue if prices fall,” Fritz explained. “It also provides a greater choice of prices, from those that focus on cheese to fresh milk, protein or butterfat.”

Coverage levels are available from 70 to 95 percent of revenue and are available statewide, according to Fritz. DRP can also be used in conjunction with the 2018 farm bill’s new Dairy Margin Coverage (DMC) program, which replaces the former Margin Protection Program.

DRP was co-developed by American Farm Bureau Federation and American Farm Bureau Insurance Services Inc. Those interested in purchasing Dairy Revenue Protection must do so through an agent selling on behalf of an approved insurance provider.


As of Feb. 8, 2019, sales of DRP have totaled more than $40 million and nearly 15 billion pounds of milk have been covered since October 2018.

DRP - How does it work?

DRP is an area-based revenue product designed to insure against unexpected declines in the quarterly revenue from milk sales relative to a guaranteed coverage level. Available in all counties in all 50 states, dairy producers may choose from a variety of milk pricing options that align with Federal Milk Marketing Order end-product pricing formulas and the manufacturing value of Class III and Class IV milk.

The expected revenue is based on futures prices for milk and dairy commodities and the amount of covered milk production elected by the dairy producer. The covered milk production is indexed to the state or pooled production region where the dairy producer is located.

Policies correspond to the quarters of the calendar year, and producers may purchase policies for up to five nearby quarters. Producers may cover up to 95 percent of their expected quarterly revenue. At the end of the insurance period, if the actual milk revenue is below the final revenue guarantee, the producer may receive an indemnity payment for the difference between the final revenue guarantee and the actual milk revenue multiplied times the share and protection factor.

Class Pricing Option

Under the Class Pricing Option, Dairy RP provides revenue protection based on an index of state-level revenue constructed with Class III and Class IV milk prices. Dairy producers can choose the percent of Class III and Class IV used to establish their Price Guarantee per hundredweight to tailor to their operation.

Component Option

The Component Pricing Option is revenue protection based on milk component production, including butterfat, protein, and other solids. The producer can select the desired butterfat percentage and protein percentage. The other solids percentage is fixed at 5.7 percent.

Crop Insurance Specialist in Michigan:

Name Region Cell Phone

Ryan Fox West Region 269-313-5566

Marc Erffmeyer Southwest Region 269-569-1039

Marc Reinhardt Bay-Thumb Region 989-450-4851

Nate Gust Southeast Region 517-605-1076

Brenda Szach Northern Region 989-329-7290

Matt Thelen Central Region 989-640-0570

Adam Gulvas Saginaw Valley Region 989-205-3526