Coverages | Livestock Risk Protection (LRP)

Livestock Risk Protection (LRP)

About LRP

LRP provides protection against declining livestock prices if the price, as specified in the policy, drops below the producer’s selected coverage price.

LRP Coverage

LRP covers a decline in livestock prices.

LRP Eligibility

Producers in all covered states with an ownership share in eligible livestock (see chart below for details).

LRP Prices

Coverage prices range from 70% to 100% of daily livestock prices for swine, fed cattle, and feeder cattle; and 80% to 95% for lambs. LRP is priced and available for sale continuously throughout the year.

Determining Coverage for LRP

Determine the number of livestock to be marketed and the target weight. Multiply the number of head by the target weight, coverage price, and insured share.

LRP Coverage Period and Restrictions

Livestock can be insured for various different weekly increments (see chart below for details).

Loss Payments

• Multiply the number of head by the cwt target weight.
• Subtract the actual ending value from the coverage price (loss payment due if positive).
• Multiply the target weight times the difference between the actual ending value and the coverage price.
• Multiply by the insured share.
• The price at which livestock is sold does not affect the loss payment.

Benefits of LRP

• Guaranteed Price
  • No Bid/Ask spread.
• Limited Basis Risk Coverage
  • The aggregate cash price used better reflects actual price received.
• Any number of head can be covered (up to limits)
• Numerous endorsement period options
  • Producer selects the period that fits their risk management plan.
• Wider range of target weights than CME
• LRP is an insurance policy
  • LRP may be viewed more favorably by lenders than hedging or speculating (derivative products).

How It Works

Eligibility

Topic	Swine	Fed Cattle	Feeder Cattle	Lamb
Market	Marketed for slaughter	Marketed for slaughter	Ready to put in feedlot for fattening	Marketed for slaughter
Insurable Livestock	Swine that producers expect to have and to market within a range of 1.5 to 2.25 lean cwt target weight (203-304 live cwt)	Steers and heifers that producers expect to grade select or higher, yield grade of 1 to 3, and to market at 10 to 14 cwt (live weight)	Steers (<6.0 cwt for steers and bulls, 6.0-9.0 cwt for steers only) Heifers (<6.0 cwt and 6.0-9.0 cwt) Dairy Cattle (<6.0 for heifers, steers, and bulls and 6.0-9.0 cwt for heifers and steers) Brahman breeds (<6.0 for heifers, steers, and bulls and 6.0-9.0 cwt for heifers and steers)	Lambs that producers expect to have and to market within a range of 0.5 and 1.5 cwt target weight at the end of the insurance period
Availability	AL, AZ, AR, CA, CO, FL, GA, IA, ID, IL, IN, KS, KY, LA, MI, MN, MO, MS, MT, NC, ND, NE, NM, NV, OH, OK, OR, SC, SD, TN, TX, UT, VA, WA, WI, WV, and WY	AL, AZ, AR, CA, CO, FL, GA, IA, ID, IL, IN, KS, KY, LA, MI, MN, MO, MS, MT, NC, ND, NE, NM, NV, OH, OK, OR, SC, SD, TN, TX, UT, VA, WA, WI, WV, and WY	AL, AZ, AR, CA, CO, FL, GA, IA, ID, IL, IN, KS, KY, LA, MI, MN, MO, MS, MT, NC, ND, NE, NM, NV, OH, OK, OR, SC, SD, TN, TX, UT, VA, WA, WI, WV, and WY	AZ, CA, CO, ID, IN, IL, IA, KS, MI, MN, MO, MT, NE, NM, NV, ND, OH, OK, OR, PA, SD, TX, UT, VA, WA, WV, WI, and WY
Max. Head Insurable	10,000 per Specific Coverage Endorsement 32,000 per Crop Year	2,000 per Specific Coverage Endorsement 4,000 per Crop Year	1,000 per Specific Coverage Endorsement 2,000 per Crop Year	2,000 per Specific Coverage Endorsement 28,000 per Crop Year
Insurance Period	13, 17, 21, or 26 weeks	13, 17, 21, 26, 30, 34, 39, 43, 47, or 52 weeks	13, 17, 21, 26, 30, 34, 39, 43, 47, or 52 weeks	13, 20, 26, or 39 weeks
Coverage Level	70-100%	70-100%	70-100%	80-95%, in 5% increments
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 Price Adjustment Factor (by type and weight)	Agricultural Marketing Service (AMS) in the “National Weekly Slaughter Sheep Review.”

NOTE: The Livestock Price Reinsurance Agreement allows for Private Reinsured Companies to have limited yearly capacity available on a first come, first served basis.

Note: This summary is for general illustration only. See policy for program details.

Updated: 7/10