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Tag: Livestock Risk Protection

Livestock Risk Protection (LRP): A Tool for Managing Price Risk in Today’s Market

Posted on by Sandy Johnson

Jenny Ifft, Agricultural Policy Extension Specialist

What is LRP? Livestock Risk Protection (LRP) is an insurance product designed to help cattle producers manage downside price risk. It functions similarly to a put option: producers pay a premium to set a floor price for their cattle. If the national cash price (based on futures markets and reported by USDA) falls below that insured price at the end of the coverage period, the policy pays an indemnity. If the price stays high, no indemnity is paid, but the producer benefits from strong market prices. Continue reading “Livestock Risk Protection (LRP): A Tool for Managing Price Risk in Today’s Market” →

Managing Feeder Cattle Price Risk

Posted on by Sandy Johnson

 By Jennifer Ifft, agricultural policy extension specialist, Flinchbaugh Agricultural Policy Chair

For producers that will have calves to sell in fall 2024 or early 2025, futures prices have rallied to around nearly $265-270/cwt. However, weather, global conflict, or other factors could negatively impact the 2024 market. Prices were relatively high throughout 2014 in response to a drought-induced decline in cow numbers, but during the fall of 2015 prices declined rapidly. While market fundamentals may currently be stronger in 2024 than 2015, markets remain volatile and high prices have never lasted forever.   Continue reading “Managing Feeder Cattle Price Risk” →

Livestock Risk Protection – What is price insurance worth?

Posted on by Sandy Johnson

By Jennifer Ifft, agricultural policy extension specialist and Sandy Johnson, Extension Beef Specialist, Colby

Livestock Risk Protection (LRP) is price insurance that pays out when market prices for feeder cattle (or fed cattle) are lower than expected. For example, if a producer calves in March and sells weaned calves around September, they can purchase LRP in March and “lock in” September futures prices. If by September, actual prices are lower than expected, they may receive a payment, or indemnity.   Continue reading “Livestock Risk Protection – What is price insurance worth?” →

Updates for Livestock Risk Protection, a price insurance tool for feeder cattle

Posted on by Sandy Johnson

by Monte Vandeveer, extension agricultural economist, Garden City

One price risk management tool available to feeder cattle producers (and other types of livestock producers) is Livestock Risk Protection, or LRP.  The LRP program from USDA’s Risk Management Agency (RMA) is a price insurance program where insurance policies are sold through local insurance agencies but still backed up by RMA, just like traditional crop insurance.  Also like multi-peril crop insurance, LRP premiums receive a subsidy through RMA. Continue reading “Updates for Livestock Risk Protection, a price insurance tool for feeder cattle” →