Livestock Risk Protection

Livestock Risk Protection

Protecting livestock producers from declining market prices

What It Is:

Livestock Risk Protection protects livestock producers from declining market prices without restricting profit potential. Coverage is available for fed cattle, feeder cattle (Brahman or dairy), lamb, and swine.

In financial terms, LRP is similar to a put option that locks in a price floor for a producer's livestock.

Details:

• Subsidies range from 20-35%
• Head Limits are 3,000 per endorsement & 6,000 per year
• Endorsement Length varies on daily availability anywhere from 13 - 52 weeks
• Coverage cannot be canceled.
• Selling livestock more than 30 days before the specified target market date in the policy disqualifies policyholders from the payment due.
• Desired endorsement lengths and coverage levels may not be available through the USDA Risk Management Agency (RMA) every day.
• A policy must be established in advance and clear USDA before a coverage endorsement can be submitted to ensure livestock.
• Coverage endorsements can only be submitted when the market is closed from 4 pm to 9 am the following morning.

Benefits:

• Premiums are tax-deductible
• There are no minimum contract sizes, brokerage fees or margin calls.
• There's no requirement to sell animals when the endorsement period is over.
• Insurance can be transferred to new owners upon sale.
• Coverage is available in months with no futures contract.

Call Your AGRM&I Agent today!