As part of our ongoing effort to deliver world-class service, products and offerings to our member-owners, Land O’Lakes is now offering Dairy Revenue Protection (DRP) as an authorized crop insurance agent. This new offering enables dairy farmers to enroll for DRP coverage through Land O’Lakes’ member risk management services.
Importantly, for dairy farmers who currently have a dairy risk management product through another insurance provider, the deadline to transition to Land O’Lakes for DRP coverage is June 30. Those who do not currently have an insurance provider can still enroll in coverage after that time.
How does it work?
When protected by DRP, producers have the opportunity to be paid when the milk market experiences adverse pricing or regional production changes.
Dairy Revenue Protection (Dairy RP) 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.
Dairy producers may choose from a variety of milk pricing options (outlined below) 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 5 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.
What are my options?
Dairy Revenue Protection offers two options that can be used independently or in conjunction.
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. The producer can choose the percent of Class III and Class IV used to establish their Price Guarantee per hundredweight to tailor to their operation.
Component Pricing 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%.
How do I obtain coverage?
Dairy RP is available in all counties in all 50 states. You must buy Dairy-RP insurance through an authorized crop insurance agent, and Land O’Lakes member risk management staff members can help you understand this important new insurance option as you decide what coverage is right for you.
If you are transitioning from another insurance provider to Land O’Lakes, the deadline is June 30. Submitting an application to Land O’Lakes Insurance Solutions will initiate the transfer process between the old provider and Land O’Lakes. No additional action is required by the member. All existing policies with original provider will remain effective until expiration.
If you have questions about this program or are interested in participating, call 651-375-4816 or email MPOL@landolakes.com. You can also sign up for text and email news alerts on DRP daily pricing here.
To learn more about DRP from USDA’s Risk Management Agency, you can view a Frequently Asked Questions document here.
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Land O’Lakes is an equal opportunity provider and employer. The U.S. Department of Agriculture (USDA) prohibits discrimination against its customers, employees, and applicants for employment on the bases of race, color, national origin, age, disability, sex, gender identity, religion, reprisal, and where applicable, political beliefs, marital status, familial or parental status, sexual orientation, or all or part of an individual’s income is derived from any public assistance program, or protected genetic information in employment or in any program or activity conducted or funded by the Department. (Not all prohibited bases will apply to all programs and/or employment activities)
This information is brought to you by Land O’Lakes and is intended for informational purposes only. Nothing contained herein can or should be interpreted to take precedence over policy language, Federal Crop Insurance Corporation/Risk Management Agency regulation, and Underwriting or Loss Adjustment rules.