Dairy Revenue Protection

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Basic Information:
- DRP is a risk management tool that provides revenue protection similar to the current RP and Area products for crop insurance.
- Insures dairy producers against quarterly revenue losses, indexed by state-level milk revenue, up to 95% coverage.
- Expected prices published daily, final prices published quarterly.
- Producer elects the following variables:
  - Pricing mechanism (Class price and/or Component price)
  - Milk production to cover
  - Coverage level
  - Protection Factor
  - The desired quarter to be covered (up to 5 quarters in the future).
- SCD is each day during which coverage is available for purchase.
- Sales Period begins when the coverage prices and rates are validated and published on RMA’s website by 5:00 p.m. EST.
- Sale Period ends at 10:00 a.m. EST the following business day in which you can purchase quarterly endorsements.
- Dairy-RP will not be sold on days when the monthly USDA Milk Production, Dairy Products, and Cold Storage reports are released.
- Milk or dairy commodity prices that experience a limit up or down move in the futures markets will not be available for determining the quarterly expected revenue.
- Producers can have multiple quarterly coverage endorsements for the same period however, they cannot cover the same pounds of milk.
- A producer is allowed to have other livestock policies covering milk for the same crop year.
- Only one policy can have endorsements in effect for the quarterly insurance period.
- Producers can have Dairy-RP & LGM during the same crop year. Coverage months can not overlap.
- Producers can have Dairy-RP & Dairy Margin Coverage (DMC) through the FSA during the same crop year. No strings attached
- Eight unique quarterly insurance periods during a crop year. (801 –808)
- The actual ending milk or component values are based upon the monthly average prices announced by USDA’s Agricultural Marketing Service.
  - Actual ending values are posted on RMA’s website at the end of the insurance period.
  - The milk yields are based upon USDA’s National Agricultural Statistics Service Milk Production report.
Two pricing options for DRP:
- Class Pricing Option:
  - Combination of Class III and Class IV milk prices
  - Based on producer’s declared price weighting factor.
  - Producer declares Class III price weighting factor (up to 1.00).
  - Class IV defaults to the difference (1.00 -Class III weighting factor)
  - A producer can elect 1.00 for either Class III or Class IV. The other Class would then be 0.
- Component Pricing Option:
  - Combination of butterfat, protein, and other solids values;
  - Based on producer’s declared butterfat test and declared protein test.
  - Producer declares butterfat test pounds and protein test pounds.
  - These elections allow the producer to establish coverage for prices to mirror the expected milk components.
  - The ‘Other Solids’ test is fixed at 5.7 pounds per 100 pounds of milk.
  - Butterfat test –elect between 3.5 pounds and 5 pounds in 0.05 pound increments.
  - Protein test –elect between 3 pounds and 4 pounds in 0.05 pound increments.
Coverage Elections:
- Declared covered milk production –pounds chosen by producer to establish coverage.
- May choose different amounts of declared covered milk production for each type and practice on the quarterly coverage endorsement.
- Can be multiple quarter coverage endorsements for the same quarterly insurance period.
- However, can not cover the same milk.
- Coverage level elections between 70% -95% in 5% increments
- Determines the dairy revenue protection expected and final revenue guarantee.
- May elect different coverage level for each type/practice.
- Coverage Levels are subsidized.
- Protection factor elections between 1.00 and 1.50 in 0.05 increments.
- No premium due with application or when electing quarterly coverage endorsement.
- Will be billed 25 days after the last day of the interval period.
Claims:
- AIP will notify the producer of a probable loss ten days after DRP data is released by RMA for each quarterly insurance period.
- The producer must submit a claim to the AIP:
  - On the AIP form.
  - Include the milk production worksheet and milk marketing records.
  - Within 60 days following the date of notice of probable loss is issued.
- Verify if the milk marketings >to 85% of the declared milk production.
- Determine if the actual butterfat test and the actual protein test are greater than 90% of the declared component values.