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Risk Management for Dairy Industry Passes Senate

The dairy industry may soon have access to new risk management tools.

All industries can benefit from risk management initiatives, whether initiated by individual companies, trade organizations or government policies. Recently, the U.S. Senate passed a five-year farm bill that includes an entirely new approach to risk management for the dairy industry.

The bill, which was championed by both senators from Vermont, Democrat Patrick Leahy and independent Bernie Sanders, as well as one of the state's representatives, Democrat Peter Welch, is designed to help stabilize dairy prices, which have shifted wildly over the last few years, according to the lawmakers.

Under the program, when the margin between the cost of producing milk and the amount a farmer is paid for his or her product falls to a certain level, farmers can receive a payout from a new type of insurance product. Farmers can choose whether to buy the insurance and how much of a margin to set before benefits kick in.

"This will give us a real opportunity to help derail the price rollercoaster that makes it so difficult for farmers to plan ahead and run their businesses," said Leahy, the most senior member of the Senate Agriculture Committee. "This makes the safety net stronger, while costing less than the program that it replaces."