The webinar covering dairy risk tools, including dairy revenue protect and dairy margin coverage programs was held on Friday, May 17 with 115 in attendance. The webinar was recorded and each presentation can be viewed at:
Part 1 with Dr. Marin Bosic:
https://connect.extension.iastate.edu/pnffdckg58jr/
Part 2 with Cassie Monger and Josh Newton:
https://connect.extension.iastate.edu/poim0vcx94kn/
Here are some “take-home” messages for each program.
Dairy Revenue Protection (DRP)
- Dairy RP adds an additional, easy to understand, affordable risk management tool to your “toolbox”.
- Dairy RP performed in Q1 since the Class III price fell and DRP triggered an indemnity. However, triggering a payment is not the only “win”. If there is NO indemnity, this means the price ended higher than your price floor, and we should be happy about that. Setting a price floor provides downside price protection and unlimited potential for the upside.
- Knowing your costs of production and having a risk management plan in place is important to keep in mind. In knowing what your risk tolerance is, will help make these decisions a lot easier to make.
- Key is Consistency. Whichever options/tools you have in place, staying consistent will be key in keeping up with the volatility in the market. The Higher futures provides an opportunity to set higher guarantee levels in the future periods.
The best way to learn the program is to call your crop insurance agent and invest in the program. Ask your agent questions about options specific to your situation.
Dairy Margin Coverage (DMC)
- Dairy producers who had coverage under the Margin Protection Program for Dairy are eligible to receive a repayment for part of the premiums paid into the program. An operation either can elect to receive 50 percent of the repayment amount as a cash refund or take 75 percent of the amount as a credit that can be used toward premiums for the Dairy Margin Coverage program.
- The income over feed cost margin was $7.99 per hundredweight in January, $8.22 per hundredweight in February, and $8.85 per hundredweight in March, triggering DMC payments for each month. For certain coverage levels, the amount to be paid to dairy farmers for these months already exceed the cost of the premium, with potential for additional payments for subsequent months depending on the margin.
- This web-based tool helps dairy producers evaluate various scenarios using different coverage levels through the Dairy Margin Coverage program. It also forecasts payments that will be made during the coverage year. Developed in partnership with the University of Wisconsin, the tool is designed to help producers determine the level of coverage under a variety of conditions that will provide them with the strongest financial safety net. It allows farmers to simplify their coverage level selection by combining operation data and other key variables to calculate coverage needs based on price projections.
- Sign-up for DMC begins June 17.