How to Get Started with Livestock Risk Protection
Managing risk can be confusing, complicated, and unpredictable. Where do you start? What are your options?
Livestock Risk Protection (LRP) insures your livestock against unexpected national market price drops. It’s a valuable tool that protects your investment for when you’re ready to bring your herd to the market.
Insure the Numbers You Need
LRP has no minimum head limits, making it a viable option for operations of all sizes. LRP contracts are customized on a per head basis, so you can insure thousands of animals, or as few as one head per policy.
The maximum head limit number for LRP has increased in recent years and most likely will continue to increase in the future. The current limits are:
How to Get Started
Steps for Success
Once the endorsement period ends, the actual ending value of your livestock will be calculated and indemnities will be sent out.
How do I know LRP is right for me?
We know things can get complicated so let's break it down!
Guard Your Investment
In September 2015, an Oklahoma producer buys specific coverage endorsement for 100 head of 5.5 cwt feeder steers for 17 weeks.
Example from “Livestock Gross Margin & Livestock Risk Protection.” Oklahoma State University
You can find the needed information in regard to the coverage listed on the RMA website or through our portal at portal.stockguard.io
How to Calculate the Premium
Insured Value: 100 head x 5.5 cwt = 550 cwt x $193.28 = $106,304
(total cwt x expected ending value = insured value)
Ending Value and Indemnities
The settlement process begins after the coverage period ends and the producer brings their cattle to market.
In this example, the producer insured their herd of feeder cattle for $106,304, with a $4,442 premium.
After the coverage period ends, the producer is given an end value of $95,854 for their herd.
Because this end value is $10,450 lower than the insured value, the producer is owed an indemnity of $10,450 to cover the difference between the insured value and end value for their livestock. After their premium is subtracted, the producer will receive a net indemnity of $6,008.