The Fundamentals of Livestock Risk Protection Insurance

As a livestock farmer or rancher, you understand the multitude of risks that can jeopardize your profitability, many of which are beyond your control.

To help mitigate the risk, many producers turn to Livestock Risk Protection (LRP) insurance. LRP insurance is a federally subsidized insurance program that provides coverage for livestock producers against declines in market prices. LRP can help protect profits by reducing downside price risk or locking in a price floor on market expectations.

First introduced in 2002, LRP has undergone changes to make the program more helpful for farmers. Recent program adjustments are making this risk-management tool even more attractive for a variety of farmers and ranchers. These changes have made a dramatic increase in LRP usage across the country, particularly, in Nebraska.

Recent LRP policy changes

1. Head limits have increased, an industry-wide benefit. 
2. Indemnity payments to farmers will now be required within 30 days, previously 60 days.
3. Adding coverage across all entities for swine.

In 2020, the due date for premiums moved from the beginning of the insurance period to the end of it, making it easier for producers to cash flow the insurance coverage. Subsidies also increased from a flat rate of 13 percent to a minimum of 35 percent at the highest coverage prices. If a producer qualifies as a beginning farmer or rancher, they receive an additional 10 percent subsidy on their premium.

While there is a positive outlook now, higher prices are not guaranteed when it comes time to sell. Just one year of market decline could end up costing you more than many years of risk management premiums.

We cannot always predict the future, but we can make sure you are protected. Crop 360 from First State Insurance offers a comprehensive approach to service and a unique suite of products and expertise to meet your ag insurance needs including Livestock Risk Management. If you have any questions or if you’re ready to get a quote on LRP for your operation, contact Matt Hoxmeier at First State Insurance.