The time is right for Livestock Risk Protection

If you have thought ever about getting livestock risk protection insurance, now is the time!

Livestock Risk Protection (LRP) from Capital Farm Credit is a federally subsidized program that helps protect your cattle operations from unexpected market declines, which is similar to a put. Even if you don’t sell your livestock by the end of the coverage period, as long as you maintain ownership, you can receive an indemnity payment should the value of the animals fall below your coverage level.

“Now's a really good time for LRP, because the cattle prices are high,” said CFC Relationship Agent Jake Surman.

“LRP isn’t mortality insurance. It’s strictly for price protection,” explained Relationship Agent Jarad Flores. “If the price during the week that their endorsement ends is lower than the floor price that they've set, they're going to get paid the difference.”

CFC’s LRP is available on a per head basis and uses area pricing to determine indemnities on calves, steers and heifers. Coverage can even include unborn calves and livestock intended for the market or slaughter. Owners can insure some or all of their herd. It is also available for swine.

CFC customers also get access to Farm Credit’s exclusive pricing tool with historical data and options to compare the premium to puts, which can help customers decide what coverage they need.

Flexible coverage prices ranging from 70 to 100 percent of the expected ending value are available, with coverage periods from about three months to a year. Ending values are determined by the weighted average prices from the CME Cattle Index. If an indemnity (payment) is triggered due to lower ending prices, there is minimal paperwork involved for the claim to be paid timely. No adjusters are needed. Since premium settlement happens at the end of the coverage period, there is no money due when you select coverage. The premium is paid at the end of the insurance period.
 Surman said having LRP right now can be a win-win.

“In addition to taking advantage of locking in high cattle prices, LRP also protects them if they have a loan,” he explained. If the price falls, then they will have some additional income to repay their loan. It’s a great program for our members.”

Livestock Risk Protection does more than preserve your business; it can provide peace of mind. Visit our website to learn more.