Livestock Risk Protection
Protect your livestock revenue by locking in a "floor price" on futures
or simply protect against catastrophic price declines.
Loan Collateral
LRP Overview
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LRP has only one peril. That is a decline in future market value of cattle or swine.
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There is a one-time application that needs to be obtained at least a day prior to securing any coverage.
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Sales periods are Monday through Friday 4pm to 8am.​​
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Policy periods available are in week time frames: 13, 17, 21, 26, 30, 34, 39, 43, 47, 52
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You should pick the time period that correlates the closest to when you will market your livestock.
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The day you take out coverage on your livestock is your Effective Date, then 13-52 weeks after that day is your End Date.
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Beginning Farmer Rancher and Veteran Farmer Rancher qualifies for additional subsidies.
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You or your entity must be conservation compliant with the FSA office.
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Livestock must be owned at the time insurance attaches.
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Livestock must be physically located in the state where coverage is written at the time insurance attaches. They can be moved to another state after that.
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Livestock that die are still eligible for indemnity if the death is reported within 72 hours.
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Ownership must be maintained up to 60 days prior to the end date (30 days on unborn calves). Any animals sold prior to these dates will be removed from the coverage and no indemnity will be paid on them.
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Ownership can be transferred on livestock sold prior to 30 days of the end date.
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Must be able to verify ownership prior to the start of insurance and sales in order to be qualified for an indemnity. If feeder cattle are not sold within 60 days, they must meet marketability requirements on the end date.
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Bills of sale/invoices must contain the number of livestock delivered, sex on feeder cattle types only, and weight of delivered livestock. For unborn livestock, you must be able to provide proof of ownership of cows or sows.
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Premium is due the month following the Sales Period.
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Coverage will not be available for purchase on days which USDA releases the cattle on feed report, nor in the event of a limit movement in any relevant livestock feeders.
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Any activity by the insured to derive financial gain through subsidy capture is considered abuse of the LRP program.
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Indemnities are recovered when the actual ending value is below the coverage price. The producer will be paid and indemnity for the difference between the coverage price and the actual ending value.
LRP Feeder Cattle
Types of Feeder Cattle Available (with price adjustment factor):
Steers
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Weight 1 (110%)= 1.0 - 5.99 cwt (for steers and bulls)
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Weight 2 (100%)= 6.0 - 10.0 cwt (steers only)
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Unborn Bulls, Steers, Heifers (105%)= 1.0 - 5.99 cwt Not born yet on the effective date but expected to be marketed by the end date. (not to be confused with Unborn Calves below)
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Heifers
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Weight 1 (100%)= 1.0 - 5.99 cwt
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Weight 2 (90%)= 6.0 - 10.0 cwt
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Predominantly Brahman
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Weight 1 (100%)= 1.0 - 5.99 cwt (for heifers, steers and bulls)
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Weight 2 (90%)= 6.0 - 10.0 cwt (heifers and steers)
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Unborn Brahman (100%)= 1.0 - 5.99 cwt (not born yet on the effective date but expected to be marketed by the end date.)
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Predominantly Dairy
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Weight 1 (50%)= 1.0 - 5.99 cwt (for heifers, steers and bulls)
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Weight 2 (50%)= 6.0 - 10.0 cwt (heifers and steers)
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Unborn Dairy (50%)= 1.0 - 5.99 cwt (not born yet on the effective date but expected to be marketed by the end date.​
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Unborn Calves
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Weight (0.6 - 0.99) Designed for calves sold within the first two weeks after birth. (beef calves, beef on dairy crossbred calves)
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Price Adjustment Factor is designed to account for the differences between steer prices and prices of other types and weights of cattle. They are applied to expected ending values, coverage prices and actual ending values prior to publishing.
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Coverage Price
Feeder Cattle insurance coverage prices and rates are based on the CME Feeder Cattle Contract, which is cash settled to the CME Feeder Cattle Index.
When you establish insurance on your feeder cattle you have chosen a % of a settled futures price for that day. This price will be used to determine if you have an indemnity on the end date. The end date price is the CME Feeder Cattle Index price for that day, which is a seven-day average.
Limits
Limit of # of feeder cattle per endorsement= 12,000 head
Annual limit on feeder cattle= 25,000 head
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To see the current insurance prices, click on the link at the top of the page- LIVESTOCK REPORT and navigate through the drop-down boxes to get the class of cattle that fit your needs.
Feeder Cattle Index price link- Commodity Index Prices - CME Group
Drought Hardship
The Drought Severity and Coverage Index (DSCI) is a tool used to quantify drought conditions in the US. It is based on the drought monitor data and is used to determine eligibility for the drought hardship exemption under the LRP policy. The DSCI is calculated as a weighted sum of the % of a county in each drought level designation, with higher weights assigned to more severe drought conditions. The drought hardship exemption allows a producer to sell his livestock more than 60 days prior to the end date and still qualify for an indemnity if they can prove drought hardship. Hardship is measured using the DSCI tool: not earlier than 30 days before the date covered feeder cattle are sold equals or exceeds 200; and The increase in DSCI exceeds 150 points between the effective date and the date covered feeder cattle are sold.
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LRP Fed Cattle
Fed Cattle are those weighing 1000+ pounds. Dairy cull cows have been added to the fed cattle category. The Fed Cattle coverage has the same rules as those listed above in the overview and the same number of limits on the number of head that can be covered.
The end date price, or the actual ending value is the price of the live commodity as calculated by the Agricultural Marketing Service for the live Basis Sales, Steers Over 80% Choice category. Type in "5 Area Weekly Weighted Average Direct Slaughter Cattle" in your search engine to get the current price.
Dairy cull cows can have a weight range from 8 to 15 cwt. The length of endorsement is 13 weeks. The price adjustment factor is seasonal and varies with a range from approximately 45-55%. They must be sold within 60 days of the SCE end date.