A new dairy insurance service from American Farm Bureau Insurance Services (AFBIS) will bring an extra level of support to a dairy sector that has been battered by losses over the past four years.
AFBIS’ Dairy Revenue Protection insurance policy, available by early October, covers potential revenue loss over five quarterly insurance periods.
The insurance product was developed by American Farm Bureau Federation Chief Economist John Newton in partnership with AFBIS and economists from the University of Minnesota and Cornell University. It fills a demand not met by previous products.
“Farmers have been suffering, and dairy farmers especially,” American Farm Bureau Federation President Zippy Duvall said. “The number of dairies that have had to close or sell to larger operations is shocking. We have always known revenue protection insurance could help farmers weather this storm, but no one offered it. That’s why AFBIS is stepping up and rolling out this insurance now, when the need is so great. We appreciate the support from the Agriculture Department and look forward to the rollout by October 9.”
Michigan’s dairy producers have offered a tremendous amount of insight and information leading to development of this product, designed to afford them the same type of protection as crop insurance.
“This is welcome news for dairy farmers across the country who have struggled financially over the past several years due to depressed market prices,” said Ernie Birchmeier, Michigan Farm Bureau (MFB) Manager, Center for Commodity, Farm and Industry Relations and Livestock and Dairy Specialist. “Farm Bureau has worked diligently over the past year to develop a product that would provide a greater level of risk management for the dairy industry. In these challenging economic times, it is great to have a new tool in the tool box to help manage risk and provide a level of income guarantee for our dairy farmers.”
USDA officials support the move toward revenue insurance for dairies. “Expanding the federal crop insurance program to markets that need it is key to an effective farm safety net. Because of cooperation with partners like the American Farm Bureau Federation, we’re able to offer this new product in a way that it can be flexible based on the needs of dairy producers,” Bill Northey, Under Secretary, Farm Production and Conservation, said.
Dairy farmers will have the option to select between class or component pricing options. The class pricing option uses an average of Class III and Class IV milk prices based on the insured’s declared class price weighting factor. The component pricing option uses butterfat, protein and other solids prices, as well as the declared butterfat and protein test to determine an insured component value of milk. Pricing options allow farmers to customize their price elections more accurately according to individual price risk.
Farm Bureau Insurance of Michigan is pleased to be able to offer this coverage as a way of protecting dairy farm income.
“The Dairy Revenue Protection will be available through an agent selling on behalf of an approved insurance provider,” said Janna Fritz, Manager, Farm Bureau Insurance of Michigan Crop Insurance Team. “We’re so happy for this Farm Bureau-developed product, and we look forward to working with Michigan’s dairy farmers to provide them with the level of coverage they need. We urge dairy producers to contact their Farm Bureau Insurance agent, who will then make referrals to our Crop Insurance Team. We’re excited to offer this coverage to dairy farmers across Michigan.”
Coverage options start at 70 percent and are available up to 95 percent, in 5 percent increments.
For more information, visit www.dairyrp.com and https://www.fb.org/market-intel/dairy-revenue-protection-is-here.