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Livestock Gross Margin (LGM)

Your ongoing profitability is important, and it’s tough to stay profitable as feeding costs rise and livestock prices fluctuate. That’s where Livestock Gross Margin Insurance (LGM) can be useful.

How LGM Insurance Works

LGM helps protect your operation against a decrease in margin caused by a drop in livestock prices or an increase in feed costs.

LGM is a federally insured risk-management program available to cattle producers in all 50 states. Rather than protecting based on selling price, LGM uses adjusted futures prices to determine your expected gross margin and the actual gross margin.

Your gross margin — a valuable indicator of profitability — is the difference between your revenue from livestock sales minus feed costs. 

The prices are based on simple averages of Chicago Mercantile Exchange Group futures contract daily settlement prices and not based on the prices you receive at market. 

LGM doesn't insure against:

  • Livestock death
  • Unexpected increases in feed use
  • Any other loss or damage to the producer’s livestock
  • Anticipated or multiple-year increases in feed costs

Benefits of Livestock Gross Margin from Stockguard

  • 3 hedges in one convenient package

  • Can be used in combination with a Livestock Risk Protection Policy*

  • Is available in all 50 states

  • Federally insured

  • Premium cost is subsidized up to 50%

  • Eliminates margin calls associated with futures and options contracts

Why Use LGM Insurance

Since significant changes were made to LGM-Cattle in 2020, cattle producers can take advantage of the valuable risk management features and enhance their bottom line over time. 

The premium cost is subsidized — so you pay only a portion of the cost of the insurance you buy. And, over time, these lower costs mean more money in your pockets if you have increased feeding costs or other reasons your margins decrease. 

Whether you’re concerned about rising feed costs or volatility in the live cattle markets, LGM can be an important part of your risk management strategy.

Take the Next Step. Protect Your Operations

The security of your bottom line is at stake, and Stockguard is ready to help. Request a quote today, and your Stockguard representative will reach out to you.

Work with Stockguard to get the Best Advice

While there’s a general awareness of LGM’s availability on the market, working with a knowledgeable advisor is important, as how you’ll use LGM will depend on a number of factors, including market conditions and your current situation. 

Request a quote for your operation today, and your Stockguard representative will contact you to discuss your options and get the best protection for your livestock.

*An insured operation may have both an LGM and LRP policy; however, an insured may not insure the same class of livestock with the same end month or have the same insured livestock under multiple policies. 

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