Coverages | LGM for Cattle | LGM for Hogs | Livestock Gross Margin for Dairy

Livestock Gross Margin (LGM)

Hogs | Cattle | Dairy

About LGM Dairy

The Livestock Gross Margin for Dairy Cattle Insurance Policy provides protection against the loss of gross margin (market value of milk minus feed costs) on the milk produced from dairy cows.

LGM Dairy Eligibility

Any producer who owns dairy cattle in AL, AR, AZ, CA, CO, CT, DE, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MO, MS, MT, NC, NE, NV, NH, NJ, NM, NY, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WV, WI, WY is eligible for LGM.

Determining Coverage for LGM Dairy

Producers will need to determine the number of hundredweight of milk to be marketed and insured in each month of the insurance period. They will also need to determine the number of tons of corn or corn equivalent and the tons of soybean meal or soybean meal equivalent that they expect to feed for each month in which they insure their milk. The number of tons of corn or corn equivalent must be between 0.00364 tons (7.28 lbs) and 0.02912 tons (58.24 lbs) per hundredweight of milk. The number of tons of soybean meal or soybean meal equivalent must be between 0.000805 tons (1.61 lbs) and 0.006425 tons (12.85 lbs) per hundredweight of milk. Producers may also choose to use default values of 0.014 tons of corn (0.5 bushels) and 0.002 tons of soybean meal (4.0 lbs) per hundredweight of milk.

Expected Gross Margin Per Month = Expected Revenue – Expected Cost of Feed for Month Expected Revenue = Expected Milk Price x Target Marketings Expected Cost of Feed = (Corn Tons x 2000/56 x Expected Corn Price) + (Soybean Meal x Expected Soybean Meal Price)

LGM Coverage Period and Restrictions

• 12 insurance periods per year.
• 11 months each.
• No milk can be insured in the first month of the insurance period. Sales during the first month will NOT be counted as marketings in the event of a claim.
• Coverage begins one full calendar month following the sales closing date.
• Sales period begins the last business Friday of each month until 8:00pm the following evening.
• Covers up to 240,000 hundredweight of milk in any insurance period or crop year.

LGM Loss Payments

• Calculate the Actual Gross Margin using the last three trading days prior to each contract’s expiration date.
• Subtract the Actual Total Gross Margin from the Gross Margin Guarantee to obtain the loss payment.
• The price at which cattle are sold does not affect the loss payment.
• Loss payments will be prorated if actual marketings fall below 75% of target marketings

Updated: 7/10