Demand for Gross Margin Dairy insurance again exceeds funding supply

Washington Ag Today December 16, 2011 The first-come, first-served nature of the sales and the limited funding available, means many milk producers who want to purchase USDA s Livestock Gross Margin Dairy insurance aren’t getting it.

Jo Lynne Seufer with the regional office of the Risk Management Agency says when the first sale for 2012 was held in October few producers in the northwest were able to get coverage.

Seufer; “Fortunately when the next sales go round happened we had about another 8.1 million allocated and at the end we got no applications approved in Oregon but we did get 11 in Idaho and 22 in Washington state. Idaho alone was about 14 million dollars in liability coverage and Washington state was almost 25 million in liability coverage. We were fortunate those policies got through, but again we just ran out of money.”

With adequate funding Seufer says over 60 policies could have been sold in the northwest.

Only 20 million dollars was allocated nationally for fiscal 12 for all livestock insurance programs and the dairy coverage had used up 13 million. Funding has to be reserved for the other livestock programs. So, Seufer says there will be no sale this month for the dairy gross margin program.

Seufer says this dairy insurance is like buying a put option to protect the downside price of milk and bundling it with a call option to protect the upside price of feed.

I’m Bob Hoff and that’s Washington Ag Today on Northwest Aginfo Net.