USDA Modifies DRP Sales Period Due to Market Volatility
USDA’s Risk Management Agency (RMA) is modifying the sales period over weekends for Dairy Revenue Protection (DRP) because of the high volatility of milk prices, the agency noted in a press release. Beginning June 5, 2020, the sales period will begin no later than 4:30 p.m. central time (CST) when the coverage prices and rates are published and will end at 9:00 a.m. CST of the following business day or 9:00 a.m. CST on Sunday, whichever is earlier. The next sales period will begin no later than 4:30 p.m. CST on the following business day.
“The DRP program is an excellent risk management tool for dairy producers, providing peace of mind during unpredictable market fluctuations such as the dairy industry is experiencing now,” RMA Administrator Martin Barbre said. “USDA wants to be sure that we make the necessary adjustments to ensure that the Federal crop insurance program continues to serve the risk management needs of our nation’s producers during this unprecedented time.”
This change will only cause an impact when milk producers can purchase DRP quarterly endorsements, it does not change the timing of indemnity payments. Additionally, this modification will also be incorporated into the DRP policy for the 2022 crop year.
Dairy producers to date have purchased $11.9 billion of 2020 DRP coverage, with premiums totaling $145.9 billion. Total current DRP purchases represent over 25% of the milk likely to be produced in the United States in 2020.