Livestock Risk Protection
Farm Credit Services is pleased to offer livestock producers a new risk management tool · Livestock Risk Protection.
What is LRP?
Livestock Risk Protection (LRP) an in insurance product designed to insure against declining market prices, protecting producers from a drop in the market for the period selected. It is managed by the Risk Management Agency and the premiums are subsidized by the Federal government. LRP is available for swine, feeder and fed cattle in a number of states, including Minnesota, South Dakota and Wisconsin.
What determines LRP Coverage?
Coverage amounts are based on Chicago Mercantile Exchange (CME) prices for swine and feeder cattle and the 5-Area Weekly Weighted Average for slaughter cattle. Producers determine the length of time and the coverage levels desired. If the Actual Ending Value (based on the above markets) at the end of the insurance period, is less than the coverage chosen, you collect.
How does LRP work?
Once eligibility is established, customers purchase a Specific Coverage Endorsement (SCE) for a certain number of head, level of coverage & number of weeks.
Premium is paid upon signing the SCE and coverage is immediate. If, when the ending of your insurance period arrives, the Actual Ending Values are less than the coverage you have chosen, a settlement check will be issued.
Liability is not dependent upon the price for which you sold your livestock. Proof of ownership is required.
What are the LRP options?
An LRP policy offers many options. Below is a grid that outlines the choices for each product.
| Swine | Fed Cattle | Feeder Cattle | |
| Market | Marketed for Slaughter | Marketed for Slaughter | Going to feedlot for fattening |
| Insured Livestock | Swine that producers expect ot have and market (lean weight) 2005 - within a range of 1.5-2.25 lean weight (203 - 304 live cwt) |
Fed cattle steers and heifers that producers expect to grade select or higher, yield grade of 1-3 and to market at 10-14 cwt (live weight) | Steers (6.0 cwt for setters and bulls, 6.0-9.0 cwt for steers only) Heifers (less that 6.0 cwt and 6.0-9.0 cwt) Dairy Cattle (less that 6.0 for heifers, steers and bulls, and 6.0-9.0 cwt for heifers and steers) Brahman breeds (less that 6.0 for heifers, steers and bulls and 6.0-9.0 cwt for heifers and steers) |
| Availability | CO, IA, IL, IN, KS, MN MI, MO, ND, NE, NV, OH, OK, SD, TX, UT, WV, WI, and WY |
CO, IA, IL, IN, KS, MN MI, MO, ND, NE, NV, OH, OK, SD, TX, UT, WV, WI, and WY |
CO, IA, IL, IN, KS, MN MI, MO, ND, NE, NV, OH, OK, SD, TX, UT, WV, WI, and WY |
| Max. Head Insurable | 10,000 per SCE 32,000 per crop year |
2000 per SCE 4000 per crop year |
1000 per SCE 2000 per crop year |
| Cov. Level | 70%-95% | 70%-95% | 70%-95% |
| Actual Ending Value | Agricultural Marketing Service (AMS) "Negotiated" and "Swine or Pork Market Formula" categories |
Agricultural Marketing Service (AMS) 5 Area Weekly Weighted Average Direct Slaughter Cattle - Live Basis Sales, Steers, "35-65% Choice" |
Chicago Mercantile Exchange (CME) "Feeder Cattle Reported Index" multiplied by the adjustment factor (by type/weight) |