What is LRP?

LRP (Livestock Risk Protection) is a USDA-subsidized insurance program that helps livestock producers protect against market price drops.

Key features and benefits of LRP:

How does LRP work?

Livestock Risk Protection (LRP) provides insurance coverage to protect livestock producers against declining market prices. Producers select a coverage price level and period that aligns with their expected marketing date. If the market price falls below the selected coverage level at the end of the coverage period, the producer receives an indemnity payment to cover the price difference.

The LRP Insurance Process:

Choose your livestock type (e.g., cattle, swine)
Select the coverage period and price level.
Pay the premium after livestock are sold (partly subsidized by the USDA).
If market prices drop below your coverage price, you receive an indemnity.

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:

No More Margin Calls

Focus on raising and selling your livestock without worrying about the expenses of margin calls or the financial risks that come with them.

What is the difference between LGM and LRP?

Whereas LGM covers the price of the gross margin per head, LRP uses the Chicago Mercantile Exchange’s contract prices to insure the price of sold livestock. While LRP is typically a better fit for cow-calf operations, LGM is the preferred option for most feedlot operations.

LRP VS CME Trading

While LRP feeder cattle insurance coverage prices and rates are based on the Chicago Mercantile Exchange’s (CME) Feed Cattle Contract prices, there are some key differences between LRP and CME put options.

LRP

CME

How Do I Purchase LRP?

Unlike market contracts and options, LRP doesn't require a margin account or broker. However, you must buy LRP through a crop insurance agent who has taken the extra training courses for livestock coverage.

With the pressure that is on the cattle industry today, you need experienced, licensed insurance agents to help your business. This is where Stockguard comes in — we’ll help you insure your herd with the best policy at the right time.

See How to Insure Your Livestock with LRP from Stockguard

Get Flexibility in Your Coverage

LRP coverage is available year round for your operation, with insurance periods to match your operation’s market timing needs. You also have numerous coverage options, ranging from 70-100% of the expected ending market value of animals.

Also, you can sell LRP-covered livestock up to 60 days prior to the end date of your insurance policy, which is beneficial if you end up facing drought or other conditions outside of your control.