It was noted by Cody Lovercamp, USDA Risk Management Agency specialist, that there are currently 604 varieties of crops covered by USDA crop insurance, which includes livestock.
Lovercamp provided updates on some programs available for cattle producers – Livestock Gross Margin (LGM) for beef cattle, dairy cattle and swine and Livestock Risk Protection (LRP) for fed and feeder cattle and swine – during the Washington update at the recent Cattle Industry Convention.
Livestock Gross Margin
LGM provides protection against the loss of gross margin (the market value of livestock or milk minus feed costs) on livestock. Lovercamp explained it uses the Chicago Mercantile Exchange (CME) to establish margins. “Indemnity at end of the insurance period is the difference,” he said.
This insurance provides protection against the loss of gross margin on cattle. A subsidy is based on the dollar deductible that a producer chooses. Deductible ranges are from $0 – $150 in $10 increments; the subsidy ranges from 18% – 50%.
Lovercamp said LGM offers an 11-month insurance period – and each sales month, a producer can purchase coverage once per week.
The producer selects the target marketing months in which their cattle will be marketed. At the end of the insurance period the producer will submit a marketing report showing the number of actual cattle marketed and provide sales receipts with the marketing report for payment.
Indemnity will be received if the actual total gross margin is less than the gross margin guarantee. Actual marketings must be at least 75% of target marketings.
“This update allows weekly offers instead of monthly,” Lovercamp said. “And you pick the months when you’re actually marketing livestock. Participation is jumping as margins become tighter.”
Livestock Risk Protection
LRP protects producers against a decline in market prices below a producer’s selected coverage price. This program also uses CME futures and option prices to determine offers. Lovercamp said coverage should correspond to the timeframe when livestock would normally be marketed and sold, and daily offers are available.
“The premium is due at the end of the endorsement period, which means greater flexibility has been added,” he said. “And coverage is now available for unborn livestock, which has been very well received.”
There are two LRP programs, for fed cattle and for feeder cattle.
Rainfall Index Programs
Lovercamp also spoke about Rainfall Index Programs for Pasture, Rangeland and Forage as well as Annual Forage, due to concerns about ongoing drought in many regions.
He said Rainfall Index Programs protect against a lack of precipitation (in a single peril program) and protect against losses based on deviation from normal/historical index data. They utilize the NOAA’s Climate Prediction Center’s gridded precipitation data (with 0.25º grids) – they do not measure the precipitation on your specific operation. Two-month intervals provide flexibility for producers.
The Pasture, Rangeland and Forage programs are designed for perennial forages. Their crop year is the calendar year, and 11 two-month intervals are available. Annual Forage is designed for annually planted forages, with four growing seasons, and there is a dual use option as well.
“The dual use option came out of last Farm Bill,” Lovercamp said. Due to changes in forage and small grains policy, “there’s been big uptick in participation because of that.”
If producers have any questions about how these program changes may benefit them, they should reach out to the USDA-RMA.
by Courtney Llewellyn