Livestock Risk Protection
Cattle:
The Livestock Risk Protection Insurance Plan for cattle (LRP-Feeder Cattle and LRP-Fed Cattle) is designed to insure against declining market prices. You may choose from a variety of coverage levels and insurance periods that match the time your cattle would normally be marketed (ownership may be retained).
Premium rates, coverage prices, and actual ending values are posted online daily. You may choose coverage prices ranging from 70 to 100 percent of the expected ending value. At the end of the insurance period, if the actual ending value is below the coverage price, you will be paid an indemnity for the difference between the coverage price and actual ending value.
Visit RMA’s website to see the LRP program’s coverage prices, rates, actual ending values, and per hundredweight insurance costs. Actual ending values are based on weighted average prices, from the Chicago Mercantile Exchange Group. Actual ending values are posted on RMA’s website at the end of the insurance period
Advantages
Livestock Risk Protection allows a producer set a floor price (similar to that of using a put option), all while leaving upside price potential open. Dissimilar to market agreements and alternatives, LRP doesn’t require a margin account or broker, it is nearer to the real closure value of the livestock and depends on cash market index prices instead of the futures market. You can also tailor this policy to cover the exact number of pounds that you intend to market at a later date. This policy typically costs less than other alternatives and is typically favored by ag lenders.
Availability
You submit a one-time application for LRP coverage. After the application is accepted, you may buy specific coverage endorsements.
For Feeder Cattle on each endorsement you are allowed to cover up to 1,000 head of feeder cattle that are expected to weigh up to 900 pounds at the end of the insurance period. The annual limit for LRP-Feeder Cattle is 2,000 head per producer per year (July 1 to June 30). All insured calves and cattle must be located in a state approved for LRP-Feeder Cattle at the time you buy an insurance policy. Coverage is available for: Calves, Steers, Heifers, Predominantly Brahman cattle, and Predominantly dairy cattle.
For Fed Cattle on each endorsement you are allowed to cover up to 2,000 head of heifers and steers (weighing between 1,000 and 1,400 pounds) that will be marketed for slaughter near the end of the insurance period. The annual limit for LRP-Fed Cattle is 4,000 head per producer for each crop year (July 1 to June 30). All insured cattle must be located in a state approved for LRP-Fed Cattle at the time you buy insurance coverage.
The length of insurance coverage for both LRP-Feeder Cattle and LRP-Fed Cattle available for each specific coverage endorsement is 13, 17, 21, 26, 30, 34, 39, 43, 47, or 52 weeks.
LRP-Feeder and LRP-Fed cattle coverage is available in: Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. LRP-Feeder Cattle is also covered in Hawaii.
Buying a Policy
You must buy LRP-Fed Cattle insurance through an LRP-licensed insurance agent. You can fill out an application at any time. However, insurance does not attach until you buy a specific coverage endorsement. You must pay the insurance premium the day you buy insurance coverage for coverage to start. You may buy multiple specific coverage endorsements with one application. Your insurance coverage starts the day you buy a specific coverage endorsement and RMA approves the purchase.
Swine
Livestock Risk Protection Swine is intended to guarantee against declining market prices. Pork producers may choose from a variety of coverage levels and insurance periods that match the time your hogs would normally be marketed.
You may purchase LRP-Swine throughout the year from an RMA-approved livestock insurance agent. Premium rates, coverage prices, and actual ending values are posted online daily. https://public.rma.usda.gov/livestockreports/main.aspx
You may choose coverage prices ranging from 70%-100% of the expected ending value. At the end of the insurance period, if the actual ending value is below the coverage price, you may receive an indemnity payment for the difference between the coverage price and the actual ending value. Actual ending values are calculated from price series data from USDA’s Agricultural Marketing Service. Actual ending values are posted on RMA’s website at the end of the insurance period.
Advantages
LRP Swine allows a producer to set a floor price (similar to that of using a put option), all while leaving upside price potential open. Dissimilar to market agreements and alternatives, LRP doesn’t require a margin account or broker, it is nearer to the real closure value of the livestock and depends on cash market index prices instead of the futures market. You can also tailor this policy to cover the exact number of pounds that you intend to market at a particular date. This policy typically costs less than other alternatives and is typically favored by ag lenders.
Availability
You submit a one-time application for LRP coverage. After the application is accepted, you may buy specific coverage endorsements. Insurance does not attach until you buy a specific coverage endorsement (SCE). You may buy multiple SCE’s with one application. Insurance coverage starts the day you buy a SCE and RMA approves the purchase.
Each SCE can cover up to 20,000 hogs that are expected to reach market weight near the end of the insurance period. The annual limit for LRP-Swine is 75,000 hogs per producer for each crop year (July 1 to June 30).
The length of insurance coverage available for each specific coverage endorsement is 13, 17, 21, or 26 weeks. LRP-Swine is available in all counties in all states.
Buying a Policy
You must buy LRP-Swine insurance through an LRP-licensed insurance agent. You can fill out an application at any time. However, insurance does not attach until you buy a specific coverage endorsement. You must pay the insurance premium the day you buy insurance coverage for coverage to start. You may buy multiple specific coverage endorsements with one application. Your insurance coverage starts the day you buy a specific coverage endorsement and RMA approves the purchase.
