After four years of the American dairy sector being hit with losses, American Farm Bureau Insurance Services (AFBIS) has stepped in with a new offering that will help to support farmers in the industry. The Dairy Revenue Protection insurance policy will be available by early October, according to the American Farm Bureau Federation (AFBF), and will cover potential revenue loss over five quarterly insurance periods.
“A lot of agriculture is facing some pretty unique challenges today across the board,” said John Newton, chief economist for AFBF who developed the insurance product in partnership with AFBIS as well as economists from both the University of Minnesota and Cornell University. “Commodity prices have fallen pretty sharply since 2013, but in most field crops, crop insurance is widely used to protect against declines in the market, or crop losses that might occur during the growing season.”
Crop insurance has proven to be a successful tool for most major field crops, such as soy beans, corn, wheat and cotton, added the chief economist, and there are 100 different commodities covered under the crop insurance program, but dairy farmers also need help.
“There are a variety of pressures that impact the dairy farmer. Certainly, regulatory pressures can impact the farm operations, challenges with access to labor, trade agreements – all of those things factor into the ultimate profitability and well-being of the dairy operation,” said Newton.
Two years ago, AFBF and AFBIS began a collaborative effort to develop a new policy through the Federal Crop Insurance Corporation’s 508(h) process, whereby the corporation’s board of directors receive proposed crop insurance products, review them, and then vote on whether they should go into development. The launch of the new policy was finally announced on August 08.
“This is simply an area-based revenue policy. It moves and functions to protect against revenue declines, and what would drive the changes in the dairy farmer’s revenue would be changes in US milk prices, such as declines in the prices of cheese, butter or other manufactured dairy ingredients that ultimately determine the farm value of product,” said Newton.
Farmers in the US are also being supported through emerging challenges via other resources. Earlier this summer, the US Secretary of Agriculture announced that agricultural producers hit by hurricanes and wildfires in 2017 could now apply for financial assistance through the 2017 Wildfires and Hurricanes Indemnity Program from July 16 until November 16 of this year.
