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.
What are current LRP insured prices and costs? As of June 30[1], a producer could buy a 17-week LPR “endorsement” (contract) for $329.21 per cwt, at a cost of $5.68 per cwt, for steers under 600 pounds. The contract end date would be in October 2025. This is equivalent to a price floor of $323.53, or total protection of $1646 of revenue for a 500-pound calf at a cost of $28.40.
LPR endorsements can be as long as 52 weeks, nearly a year. As of June 30, a producer could buy a 52-week endorsement for a steer weighing 600-1000 pounds, ending in June 2026. The highest available insurance price is $323.11 per cwt, which would cost $15.13 per cwt. Longer endorsements cost more because there is more market uncertainty over a longer period. This is equivalent to a price floor of nearly $308, or total protection of $2908 of revenue for a 900-pound feeder at a cost of $136.
Producers can select lower prices or insure other cattle types, with many additional options to consider. Daily prices and contracts are posted here.
Advantages and disadvantages of using LRP. LRP offers flexibility that may be of interest to many cow-calf and backgrounding operations. Coverage levels range from about 75% to 100% of expected prices, and policies are available for both feeder and fed cattle. Feeder cattle can be insured as steers, heifers, or unborn. Unlike futures or options, LRP doesn’t require a brokerage account or margin calls, and you can insure small numbers. LRP contracts are by head with no minimum, not for increments of 50,000 pounds. That makes it more accessible for producers who don’t market large groups of cattle at once. Further, LRP premiums are not due until the end of the contract period.
That said, there are tradeoffs. LRP uses national prices to determine indemnities, which may not perfectly reflect local or grid-based prices. Premium subsidies have increased in recent years, but producers still pay a portion of the cost. For producers who use more complex hedging programs and prefer the flexibility of moving into or out of positions, LRP might not be the best fit.
How widespread is LRP use? 2025 LRP enrollment in Kansas has surpassed 500,000 head of feeder cattle and will likely increase further. Current 2025 enrollment is equivalent to about 41 percent of the 2024 calf crop, but many LRP-eligible feeder cattle are purchased from other states and moved to Kansas every year. I estimate the current market share for feeder cattle to be 25 to 30 percent.
Why is LRP use increasing? Figure 1 below shows a steady increase in LRP enrollment from 2020. This coincides with the increase in premium subsidies as well as high prices and volatility. Further, many insurance agents and others have increased efforts to promote and explain LRP and have developed decision tools to assist producers.
Producers may be motivated to use LRP for two reasons. First, with cattle prices at historic highs, many producers who might not normally hedge cattle prices may be concerned about missing out if prices suddenly decline, especially after making substantial investments in their operation.
Second, producers can use LRP as part of a regular price risk management strategy. The government pays from 35-55% of the total premium cost, which makes LRP more affordable than a put option.
The bottom line: LRP isn’t right for everyone, but it’s a tool that may be worth considering for producers who are concerned about price declines. A previous series on AgManager.info covers many additional details on price risk management and LRP. Only a livestock insurance agent can provide an official quote—a list of agents can be found on the RMA agent locator.
[1] LRP prices and contracts offered change daily, based on futures markets.