The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Manage and minimize the risk for your dairy operation.
This is not just another acronym. It is a risk management tool that is highly subsidized and premium payment is deferred.
The best thing is this product will leave the top open. If prices rally, you will benefit. It can create a win – win scenario. If milk prices go down enough to cover the premiums and deductible, you will get paid. If milk prices go higher, you win. Dairy RP creates a floor price.
The next best thing is you can get revenue protection out 15 months. This could be the best long-term planning tool in the industry. If/when we get higher prices, you can put together a long-term revenue guarantee. This should allow you more comfort in planning the expense side of your operation. If you have used crop insurance, remember it is basically only 8 ½ months of risk management.
Ron Mortensen is principal of Dairy Gross Margin, LLC, an agency that specializes in Dairy risk management products--Dairy RP and LGM-Dairy, and owner of Advantage Agricultural Strategies, Ltd., a commodity trading advisor.
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