LRP: A Way to Insure Your Livestock Revenue

Is your cattle operation prepared for market volatility? Livestock Risk Protection Insurance (LRP) is designed to insure against an unexpected decline in the market price for Fed Cattle, Feeder Cattle, or Swine. It is a federally subsidized risk-management program and is available in each county and state for livestock that are intended for market/slaughter.

A producer may apply for an LRP policy throughout the year. LRP doesn’t require a minimum number of pounds or loads, and there are no margin calls or broker fees. The coverage endorsement will list the number of head to be insured, the number of weeks until the livestock would normally be sold, and the type and size of that livestock. Insurance coverage starts the day a producer buys a Specific Coverage Endorsement and RMA approves the purchase.

Coverage prices range from 70% to 100% of the expected ending value from the choices listed by RMA. At the end of the insurance period, if the actual ending value is below the coverage price, the producer will be paid an indemnity for the difference between the coverage price and actual ending value.

Actual ending values are based on weighted average prices, from the Chicago Mercantile Exchange Group Feeder Cattle Index. Actual ending values are posted on RMA’s website at the end of the insurance period.

Insurance premiums are not due until livestock are sold. Call Kevin or Carrie, Premier Farm Credit’s insurance experts, at (970)-522-5295 to learn more.

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