A possible avenue of risk protection for cattle producers just got a bit wider.
On April 22, the USDA issued a little-heralded notice announcing changes to several livestock insurance programs, including the Livestock Gross Margin (LGM) and Livestock Risk Protection (LRP) plans. In general, the changes expanded coverage in several ways and increased funding.
The USDA Risk Management Agency (RMA) announced the changes “will provide a more efficient level of coverage for livestock and dairy producers.” Changes take effect July 1.
“These changes to livestock and dairy programs strengthen risk management options and provide peace of mind in times of unpredictable market fluctuations,” said RMA Administrator Martin Barbre in the agency’s announcement.
Change details
Most of the changes were made to LRP. These include:
• Coverage expanded to fed and feeder cattle in all 50 states (previously 37);
• Cost-reducing subsidies ranging from 20-35 percent (previously 13 percent); and
• Annual limit on cattle now 6,000 head (previously 3,000 head).
A USDA spokesperson told WLJ that the LRP changes that are expected to have the most on-the-ground impact to producers is the increased subsidies and increased head limits.
“We expect producers will review the changes and find the products we offer are easier to use and to buy,” they said. “Our goal is to keep people in production and moving forward.”
Brandon Willis of Ranchers Insurance LLC told WLJ that the changes to LRP’s subsidies in particular will make sure “insurance against price declines is affordable.”
“LRP allows producers to insure between 70-100 percent of the projected price of their cattle,” he explained. The projected price is based upon feeder cattle futures prices and varies depending upon the type of cattle (e.g., steers or heifers) and the weight of the cattle.”
One of the other changes made to LRP was an update to the Chicago Mercantile Exchange trading requirements. According to RMA, this was “to allow for more insurance endorsement lengths to be offered for producers to purchase,” something Willis said was very much wanted by producers.
The LGM plan also saw some updating. The key change to that program was increased annual head limits on cattle. This change came about as a result of the Bipartisan Budget Act of 2018. Prior to that act, the Federal Crop Insurance Act limited the amount of funds available to support livestock plans of insurance offered by RMA to $20 million per fiscal year, according to the RMA. The USDA spokesperson explained that, prior to the act, there was a capacity limitation of 5,000 head of cattle in any insurance period, or 10,000 any one insurance year. Now there is no capacity limitation.
You can find more information online at rma.usda.gov/Topics/Livestock or by reaching out to a USDA-approved insurance agent. Agents can be found on the RMA site via the “Agent Locator” link at the bottom of the page. — WLJ
