farm health & insurance
Protecting Your Risk By Marcus Creasy
Feeder calf producers should be aware of changes in Livestock Rick Protection insurance With the rough seas of the cattle industry not indicating calmer times ahead, wouldn’t it be nice to find something a producer can use to help offset the drops in the cattle market? Livestock Risk Protection is a federally-reinsured livestock product that provides single peril risk protection against the decline in prices over the insurance period a producer selects. Livestock Risk Protection (LRP) is an insurance product administered by the Risk Management Agency (RMA) arm of USDA. The focus of this article will be to talk about some of the changes for 2021 in the LRP-Feeder Cattle piece of the program. LRP-Feeder cattle encompasses the calf side of our industry and is now available to producers in all 50 states. The LRP-Feeder Cattle coverage provides an indemnity payment in the event the Feeder Cattle Index falls below the Coverage Price a producer selects for a date in the future. Feeder cattle can be insured from 100 pounds up to 900 pounds in varying categories across steers and heifers. With the changes made for the RY 2021, calves can even be insured before birth. In addition to the unborn calf category change, RMA made some significant expansion in the subsidy available for producers that utilize LRP: n 35 percent subsidy for 95-100 percent Coverage Level n 40 percent subsidy for 90-94.99 percent Coverage Level n 45 percent subsidy for 85-89.99 percent Coverage Level n 50 percent subsidy for 80-4.99 percent Coverage Level n 55 percent subsidy for 70-79.99 percent Coverage Level The livestock ownership requirement made a drastic change as well. In the past, for a producer to be eligible for an indemnity they must keep ownership of the calves through the last 30 days of the APRIL 26, 2021
insurance period. Sometimes this would put a strain on a producer that found an excellent opportunity to market those animals just before the insurance was to end. The new requirement has been extended to 60 days back from the end date of insurance. That means a producer with an end date of Dec. 1 could sell their calves as early as Oct. 1 and still be eligible for an indemnity if the insurance would pay due to a loss in the feeder cattle index on Dec. 1. For producers that have used the coverage in the past, you may remember having to write the check for premium at the start coverage. RMA made a change for RY 2021 that allows the insurance provider to bill the coverage after the end of the endorsement period. This might allow the producer to be able to calculate the premium in their price floor when looking at coverage and not have to front the money. With rates, dates, and endorsement lengths changing daily, it is highly recommended for an interested cattle producer to start the conversation of LRP with their crop insurance agent ASAP. Values of Coverage Price will vary each day depending on how active the Feeder Cattle Index has been. There could be a scenario where the offers of coverage may not be available for a period of time. For more information on what LRP does and what it might cost a producer to purchase the insurance, contact your favorite licensed and trained crop insurance agent, or find one on the Risk Management Agency website. Marcus Creasy is an independent insurance agent focusing on coverage related to cattle and crop producers. He co-owns Adams & Creasy Insurance Agency, Inc. in north Central Arkansas. In his spare time, Marcus donates his money to his commercial cattle operation and enjoys spending time with his wife and three boys on the farm.
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