Dairy farmers have been taking it on the chin with falling milk prices for the past year or more. USDA’s Margin Protection Program (MPP), and USDA’s Livestock Gross Margin (LGM) Insurance for Dairy Cattle offer protection on the difference between a milk price and a feed ration consisting of corn, soybean meal, and for MPP, alfalfa hay. Despite significantly lower milk prices, dairy producer premiums and fees have far exceeded any distributed program benefits.

American Farm Bureau Federation (AFBF) and American Farm Bureau Insurance Services (AFBIS) are collaborating to develop a new dairy insurance product called “Dairy – Revenue Protection”. Similar to crop revenue protection policies this product would protect regional revenue (milk price x state-level milk yield per cow) rather than just milk price or the income-over-feed-cost margin. By protecting revenue this product that would offer regional risk management against both milk price and/or production declines.

AFBF/AFBIS are preparing a concept proposal to submit to USDA in April 2017. If approved this insurance product could be available as early as late 2018. This regional revenue product would not replace MPP or LGM. Dairy producers could use it to manage risk alongside MPP or LGM.