USDA Establishes Livestock Gross Margin Insurance for Dairy
In late July, the U.S. Department of Agriculture's (USDA) Federal Crop Insurance Corporation passed a resolution to establish Livestock Gross Margin (LGM-Dairy) insurance for dairy farmers. LGM-Dairy insurance, which IDFA supports, is a risk management tool that allows farmers to purchase insurance to protect against loss of gross margin, or the difference between the milk price and feed costs. The Crop Insurance Board supported the LGM-Dairy program, partly because USDA currently offers other LGM products that have been successful for cattle and swine farmers.
The Pennsylvania and New York Centers for Dairy Excellence have joined with Dr. Bruce Babcock of Iowa State University, LGM-Dairy's developer, and other organizations in the Northeast to educate farmers about the new insurance product. LGM-Dairy is expected to be available in early summer 2008 for producers in 35 states.
While considering LGM-Dairy insurance, the Crop Insurance Corporation also reviewed a proposal by the Pennsylvania Department of Agriculture to establish a milk revenue insurance product. However, Pennsylvania officials withdrew the proposal, which would have covered up to 90% of revenue losses to producers in Northeastern states, after the Crop Insurance Corporation agreed to extend the LGM-Dairy program to Northeast producers.
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Posted September 17, 2007