LIVESTOCK RISK PROTECTION

The Livestock Risk Protection Insurance Plan 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 livestock would normally be marketed (ownership may be retained).

You may buy LRP insurance throughout the year. 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. LRP is available in selected states for fed cattle, feeder cattle, lamb and swine.

livestock risk protection insurance
livestock risk protection insurance

You may buy LRP insurance throughout the year. 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. LRP is available in selected states for fed cattle, feeder cattle, lamb and swine.

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 target hundredweight(cwt).
  • 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.

How it works for Swine

Assumptions: Producer expects to market 1,000 head of 2.70 cwt hogs and selects a coverage price of $47.00

Coverage 1,000 hogs x 2.00 cwt* x $47.00 = $94,000
Actual Ending Value 1,000 hogs x 2.00 cwt x $46.00 = $92,000
Loss Payment Assume 100% Ownership = $2,000

How it works for Cattle

Assumptions: Producer expects to market 1,000 head of 11 cwt cattle and selects a coverage price of $66.24

Coverage 1,000 head x 11 cwt* x $66.24 = $728,640
Actual Ending Value 1,000 head x 11 cwt x $65.21 = $717,310
Loss Payment Assume 100% Ownership = $11,330

How it works for Lamb

Assumptions: Producer expects to market 50 head of 1.30 cwt lamb and selects a coverage price of $85.50

Coverage 50 lamb x 1.30 cwt* x $85.50 = $5,558
Actual Ending Value 50 lamb x 1.30 cwt x $80.00 = $5,200
Loss Payment Assume 100% Ownership = $358

Benefits of LRP

  • Guaranteed price – no bid-ask spread.
  • Limit 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 his/her 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).
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”

Ready to get started?

Get in touch with Rancher’s Insurance today to learn more about LRP and to sign up. You can also see today’s market rates by clicking the button below.

CONTACT

Ranchers Insurance LLC
brandon@ranchersinsurance.com
bret@ranchersinsurance.com
(435) 213-0463
Laketown, UT

WESTERN RANCHERS

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