Managing Dairy Revenue Risk

The dairy industry is inherently unpredictable. Market fluctuations, weather conditions and production variables all contribute to an unstable income landscape for dairy farmers. Dairy Revenue Protection, commonly referred to as DRP, is a federally subsidized program designed to help dairy producers manage revenue risk. This program offers dairy farmers a way to protect against unexpected declines in quarterly revenue from milk sales.

Key Features of DRP

Multiple Pricing Options: The program offers two categories of pricing options — class pricing or component pricing— to allow farmers to customize coverage to their operation. Pricing options are based on the Chicago Mercantile Exchange (CME) futures market.

Quarterly Coverage: Farmers can select coverage for individual quarters of the year, allowing them to tailor the program to their specific production cycles and market conditions.

Customizable Coverage Levels: DRP offers flexibility with coverage levels ranging from 80% to 95% of the expected revenue. This enables farmers to choose a level of protection that aligns with their risk tolerance and financial strategy.

Milk Price and Production Indexes: The program uses a combination of futures prices for milk and dairy commodities along with state/regional milk production indexes to determine expected revenue. This approach ensures that coverage is relevant to market conditions.

To compare DRP coverage to other dairy risk management options, view our dairy & livestock insurance product comparison tool here.

How to Enroll

Producers can sign up for the program at any time. If a producer has a current DRP policy in place, the policy can be transferred to a different provider once per year by June 30.

To enroll in DRP, producers must work with an agent who is authorized to provide Federal crop insurance. This includes Crop Growers, Farm Credit East’s insurance provider. Crop Growers knowledgeable agents can provide detailed information and assist producers in customizing coverage to fit their needs.

Furthermore, Crop Growers provides customers with valuable industry insights and resources, including a weekly webinar series and weekly and daily market reports, along with access to industry leading DRP technology and industry leaders.

To get started managing your revenue risk, contact your local livestock agent today.