Dairy producers in non-major dairy states will notice a change to how their Dairy-Revenue Protection (Dairy-RP) insurance coverage is determined.
On April 29, the Federal Crop Insurance Corporation (FCIC) board of directors approved revisions to the insurance program under Section 508(h) of the Federal Crop Insurance Act, according to a report released by the USDA Risk Management Agency. The revision is applicable for upcoming crop years, beginning with quarter one of 2025.
The revision comes from reductions in National Agricultural Statistics Service (NASS) milk reporting and how those values are used to calculate Yield Adjustment Factors for the Dairy-RP formula. Beginning with coverage for quarter one through quarter three of 2025 for reinsurance year 2024 policies, the following states will have their Yield Adjustment Factors set to 1 as FCIC will not be able to calculate the states’ yields. Then, for reinsurance year 2025 policies, the actual yields for these states will revert to pooled production regions not including the non-major dairy states in those calculations.
Enrollment for reinsurance year 2024, including quarters one through three of 2025, ends June 30. Reinsurance year 2025 enrollment begins July 1.
States affected by the Dairy-RP revision include: Alaska, Alabama, Arkansas, Connecticut, Delaware, Hawaii, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Rhode Island, South Carolina, Tennessee, West Virginia and Wyoming.
As an example, Montana, Nevada and Wyoming are currently included in the Mountain pooled production region. This region is typically calculated using data collected from Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming. Montana, Nevada and Wyoming receive the actual yield determined by that region while the remaining states each receive their own actual yield. For reinsurance year 2024, Montana, Nevada and Wyoming will receive a Yield Adjustment Factor of 1. Starting July 1 with reinsurance year 2025, those three states will receive the pooled production value for the Mountain region, but calculations will not include them.
“If producers are in one of those states and have quarter one through quarter three 2025 Dairy-RP coverage booked prior to July 1 of this year, then their Yield Adjustment Factor will be 1, thus meaning yields won’t impact their coverage,” says Alex Gambonini, senior manager of advisory services with HighGround Dairy. “However, if they book coverage on or after July 1, yields will again be determined by pooled production region, just with a slightly different calculation.”
As a reminder, producers managing risk through Dairy-RP are eligible to cover revenue quarterly with endorsements purchased between the Chicago Mercantile Exchange (CME) market closing and the CME market opening. However, coverage cannot be purchased on days when applicable futures contracts move limit-up or limit-down, or on days when CME trading is closed due to holidays. Additionally, Dairy-RP coverage cannot be purchased on days when major USDA dairy reports are released.
