Gibson Insurance Group

The Risk Management Specialist

LIVESTOCK RISK PROTECTION (LRP)

The Livestock Risk Protection (LRP) program is designed to protect livestock producers against a general market decline while letting them take advantage of a rising market. LRP is a simple and cost-effective way of establishing a minimum price floor for your livestock.

Livestock Risk Protection limits the downside of the market while allowing unlimited profit potential. The timing of when you plan to market your cattle will determine your coverage period, price, and target ending weight.

Various coverage prices and periods are set everyday allowing you to tailor this product to the needs of your operation.

  • Available for Feeder Cattle, Fed Cattle, and Swine on a per head basis

  • Heifers and Steers are broke down by two ending weight categories of 0-599 lbs and 600-899 lbs

  • Coverage periods of 13, 17, 21, 26, 30, 34, 39, 43, 47, or 52 weeks

  • Premiums calculated by target ending weight are subsidized between 35-55% based on coverage price elected

  • Coverage prices are set and change daily based on the CME Futures

  • Prices at the end of coverage are based on Feeder Cattle Index

Benefits

  • No up front cost
  • No need to be an expert in futures contracts or options, and no margin calls

  • You can do as few or as many head at a time as you’d like

  • You can take full advantage of market upside

  • You can market your cattle for a higher price than the Index and still receive a loss payment

HOW DOES LRP WORK?

A producer had 15 steers he was planning to market at 800 pounds. He figured it would take him about 26 weeks to reach that target end weight. When looking at prices he saw a coverage price of $152.45 per CWT for the 26 week period. He liked the coverage and floored his cattle at that price. After 26 weeks his coverage ended the ending Index Price was $137.29. Since his coverage insured him the higher price he got paid on the difference between $152.45 and $137.29, making $15.16 per CWT. Meanwhile, the producer was able to successfully market and sell his cattle for a high price of $140 per CWT. Although, he was able sell locally at a higher price than the index he will still get paid the $15.16.

Thank you for your interest in US

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