Livestock Risk Protection Insurance (LRP) is an insurance program that provides single-peril price protection for livestock producers selling feeder cattle, fed cattle, or swine.

 

The insurance product pays an indemnity to insured producers if a national average cash price is lower than their insured coverage price level when the coverage expires. As a single-peril product, LRP only insures against price level declines. No other cause of loss is insured, such as death or poor performance of the livestock.

 

While LRP protects a selling price floor for livestock, it does not guarantee insured producers a cash price received. The program grants the right to an indemnity based on national cash market prices. Producers are still exposed to risk of changes between local cash markets where the livestock are actually sold and national cash markets against which the policy is indemnified. This difference is called LRP basis and is important for producers to consider when evaluating a potential hedge with LRP. (Source: http://lrp.unl.edu/about_lrp/index.html)

 

LRP Changes:The FCIC Board of Directors approved changes to LRP  for feeder cattle, fed cattle, and swine to take effect beginning July 1, 2007.  These included adding up to 100 percent coverage levels, revising the price adjustment factor for predominately dairy animals under 600 pounds, removing the prohibition regarding off-setting transactions, and expanding the number of eligible states.

 

LRP-Lamb: RMA announced that sales of Livestock Risk Protection - Lamb (LRP-Lamb) plan of insurance will begin on September 17, 2007 in 27 states, including Nevada.  Program materials can be found on the web at http://www.rma.usda.gov/livestock/.  Producers interested in LRP-Lamb should contact an insurance agent who sells livestock insurance and complete an application.