WASHINGTON — American Farm Bureau Insurance Services is unveiling a new dairy insurance service to support the dairy sector.
AFBIS’ Dairy Revenue Protection insurance policy, which will be available by Oct. 9, covers potential revenue loss over five quarterly insurance periods.
The insurance product was developed by American Farm Bureau Federation Chief Economist John Newton in partnership with AFBIS and economists from the University of Minnesota and Cornell University.
“The number of dairies that have had to close or sell to larger operations is shocking,” said American Farm Bureau Federation President Zippy Duvall. “We have always known revenue protection insurance could help farmers weather this storm, but no one offered it.
“That’s why AFBIS is stepping up and rolling out this insurance now, when the need is so great.”
USDA officials support the move toward revenue insurance for dairies. Bill Northey, USDA undersecretary for farm production and conservation, said the new product can be flexible based on the needs of dairy producers.
How it works
Dairy farmers will have the option to select between class or component pricing options.
The class pricing option uses an average of Class III and Class IV milk prices based on the insured’s declared class price weighting factor. The component pricing option uses butterfat, protein and other solids prices, as well as the declared butterfat and protein test to determine an insured component value of milk.
Coverage options start at 70 percent and are available up to 95 percent, in 5 percent increments.
For more information, visit www.dairyrp.com.