Dairy producers were eligible to purchase Dairy-RP coverage for the first quarter of 2019 from Oct. 9-Dec. 15, 2018. During that period, 57 endorsements were booked across Compeer’s territory. Based in the upper Midwest, Compeer Financial is a member-owned, Farm Credit cooperative serving farmers throughout 144 counties in Illinois, Minnesota and Wisconsin.
Of the 57 endorsements purchased through Compeer, 11 triggered an indemnity payment. Eight of the 11 utilized the Class III Pricing option, and three utilized the Component Pricing option.
The average indemnity for the Class III endorsements was 66 cents per hundredweight (cwt), with a range of 20 cents to $1.15 per cwt.
The average indemnity for the Component endorsements was 43 cents per cwt, with a range of 11 cents to $1.06 per cwt.
One elective option under Dairy-RP for dairy farmers to leverage if they see a potential need is the “protection factor,” ranging from 1 to 1.5. Higher protection factors increase the size of the loss payment accordingly, should the policy trigger an indemnity. Among Compeer clients, 52% utilized the 1.5 protection factor, helping increase the size of some indemnity payments.
The yield adjustment factor, which compares the expected milk production per cow versus the actual milk production per cow, did not have an effect on the indemnities triggered, Newton said. It’s important to note that when actual milk production per cow is greater than the expected milk production per cow, indemnities can decrease, and when the actual is less than the expected, indemnities can increase, he said.
Nationally, the USDA’s Risk Management Agency (RMA) said 186 endorsements earned indemnity payments in the first quarter of 2019. Indemnity payments totaled about $5.2 million. However, the USDA RMA does not break down statistical data on the number of endorsements purchased by quarter to determine what percentage of dairy producers purchasing Dairy-RP received indemnity payments.
Dairy-RP quarterly endorsements are available for sale until about the 15th of the month preceding the quarter to be covered. Producers can now purchase quarterly endorsements well into 2020, with upcoming deadlines for October-December 2019 coverage until Sept. 15 and January-March 2020 coverage until Dec. 15.
There were small changes to Dairy-RP when the 2020 crop insurance year began on July 1, 2019. Those changes included eliminating coverage options at the 70% and 75% level, and modifying minimum butterfat and protein coverage/indemnity ranges. 
-
Dave Natzke
- Editor
- Progressive Dairy
- Email Dave Natzke
