Livestock Risk Protection (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 covers a decline in livestock prices. Producers in all covered states with an ownership share in eligible livestock. Coverage prices range from 70-100% of daily livestock prices for swine, fed cattle, and feeder cattle; and 80-95% in 5% increments for lamb. LRP is priced and available for sale continuously throughout the year.
Determining Coverage

Determine the number of livestock to be marketed and the target weight. Multiply the number of head times the target weight, times the coverage price, times the insured share. 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
* 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
* May be viewed more favorably by lenders than hedging or speculating (derivative products)

How It Works
Contact Rodger@agri-nw.com or call him at 800-648-2414 to find out more!