Livestock Risk Protection, or LRP is likely the best option cattle producers have through Federal Crop Insurance to guard against declining livestock prices. LRP is now subsidized at 35% while insuring up to 99% of the Chicago Mercantile Exchange Cash Settled Value. LRP insures livestock pricing for a period of time of your choosing between 13 to 52 weeks from the day you purchase an endorsement. This policy does not cover mortality, only declining prices. LRP can be purchased any day of the year as long as markets are not closed for federal holidays or suspended due to extreme market volatility.
In short, LRP allows you to purchase coverage on any number of head for a length of time between 13 to 52 weeks, however long you intend to hold them. You will also select a target weight that you expect to achieve for the covered cattle at the end of the endorsement period. All cattle must be in the possession of the owner of the policy until 60 days prior to the end of the endorsement for coverage to remain intact. If the cash settled value on the CME for the endorsement end date is below your covered price, a payment will be generated for the difference for each pound covered by the endorsement.
With livestock prices near an all-time high, there has never been a better time to utilize this program!
