Livestock Risk Protection
Livestock Risk Protection (LRP) insurance protects cattle producers against unexpected down swings in the national market price.
LRP insurance functions like a put option, creating a floor on the national selling price at a future point in time, while allowing the producer to benefit from price increases.
LRP is a single-peril crop insurance product, meaning it has one purpose, to protect you, the farmer, from a decline in price.
LRP policy provides insurance only for a decline in livestock prices.
The price at which livestock are actually sold is not used in indemnity (claim) calculations.
The ending price on the policy is based on the CME board, NOT what you actually sell they calves for - 7 day rolling average
LRP policy does not insure against:
Death or other loss or destruction of livestock
Any other loss or damage of any kind.
LRP Benefits for Producers
Guaranteed Price
LRP protects fed cattle producers against a decline in prices below the established coverage price. It is essentially a subsidized put.
Contracts are offered on a per head basis, making it more customizable to smaller size operations, unlike CME contracts that are 40,000-pound contracts.
The premium for this policy is government subsidized, as part of the farm safety net. Subsidies are subject to change, but here are the current subsidy rates.
You would need to select which coverage level you want. The coverage level is similar to a deductible on you car insurance. Say you have a $1,000 deductible for your car. If your car is valued at $10,000, you would actually only get $9,000. Coverage levels for crop insurance are much the same. If you select an 80% coverage level, then you would have a 20% deductible. The lower the coverage level, the cheaper your premium would be, but also the less coverage you will have if you have a claim.
*If the insured qualifies as a beginning or veteran farmer/rancher, the premium subsidy will be 10 percentage points greater than the premium subsidy that would otherwise be received – Verification of BFR and VFR must be submitted with/or prior to the LRP application, not after.
There are Two types of LRP to choose from for cattle:
1. Feeder Cattle – Less than 900 pounds, ready to put in feedlot for fattening
a. Weight 1 – up to 600 pounds
b. Weight 2 – 600 - 900 pounds
If you sign up for Weight 2 and they don’t reach 600 pounds, the policy can be recalculated for Weight 1, but the number of head insured will likely decrease. For example, if you signed up with 100 head, it may adjust down to 95 head. However, as long as the average doesn’t drop down below 600, dropping you out of that weight class, you’re fine. If it does drop you out of the weight class, we’ll just have to adjust the number of head.
Endorsements have to be separate, one for steers and a separate one for heifers. Note that if you have extra steers than originally thought and less heifers, you can’t substitute steers for heifers, it is two separate endorsements. Cattle in this category do not have to be sold at the end of the endorsement period.
2. Fed Cattle – Greater than 900 pounds, marketed for slaughter. Cattle in this category do have to be sold at the end of the endorsement period and sales records must be provided in order to receive an indemnity.
The target weight for fed and feeder cattle is based on live weight.
LRP Coverage prices and rates change daily and must be referred to at the time of sale for each endorsement. If you would like to see the prices, they are on the Risk Management Agency’s website. However, if you want to skip these steps you can just call me, or another crop insurance agent and we will be glad to help!
Go to: www.rma.usda.gov
Click on tools then click on livestock reports (LRP and LGM) - you want to choose LRP for this program.
Click on LRP Coverage Prices, Rates and Actual ending value
Enter the effective date of your endorsement and click next
Continue to answer all questions, click next until create report is the only option left
*Note that the price shown on this report DOES already have the subsidy factored in, so the amount shown in the Producer Premium column is the amount you would pay.
The LRP plan of insurance has very specific sales periods, which are a huge pain, in my opinion.
Sales Period begins daily at the time prices and rates are published on the RMA website (approximately 3:30 CST) and ends the following day at 8:25 a.m. CST.
Sales will be available Saturday mornings until 8:25 a.m. CST
Sales will not be available on Monday mornings, Sundays or any period that would have an effective date of federal or market holiday
One really great thing about this plan is that the Premium is due after the endorsement ends. You should not have to pay anything upfront.
Coverage level is based on the chosen coverage price. Coverage levels will range from 70% to 100%.
FAQ’s
1. Q. Regarding the 72-hour notice of death or disease, must an insured notify the insurer every time there is a death? Is there any tolerance allowed?
- A. There is no tolerance in the policy. If the insured is insuring every animal eligible for coverage in his/her operation, he/she will need to use the 72-hour notice of death requirement in order to maintain coverage for all animals insured on the policy. The only options available to get around this requirement would be to insure only the number of head expected to reach the target weight (i.e. take normal death loss into account up front) or to insure less than the total number of livestock in the operation so the insured will not have to be concerned with having less cattle reach the target weight than what was insured (unless some catastrophic event occurs in which case the insured could utilize the 72-hour notification requirement to maintain coverage.)
2. Q. Is theft covered under the policy?
- A. No, theft is not covered under the LRP policy. The 72-hour notification requirement does not apply to theft loss. The coverage on the stolen livestock is terminated.
3. Q. Why do shorter coverage periods have multiple coverage prices offered while longer periods have only one coverage price available?
- A. LRP is price-based on Chicago Mercantile Exchange (CME) options. The CME only lists options that have traded before. Since the longer period options do not trade as often, there are only certain endorsement lengths and coverage prices that can be established.
4. Q. If livestock is moved to a feedlot prior to the end of the insurance period and the feedlot takes a percentage of the interest for feeding out the livestock, does anything need to be done to the policy?
- A. Yes, a Transfer of Right to Indemnity needs to be on the policy to transfer the percentage of interest to the feedlot. If a transfer is not done, the coverage of the percentage of interest taken by the feedlot would be terminated because the insured transferred this interest in the livestock prior to 30 days to the end date.
5. Q. Under the LRP-Feeder Cattle program, does a transaction have to happen at the end of the insurance period in order to collect a claim?
- A. The Specific Coverage Endorsement for LRP-Feeder Cattle technically states that the cattle have to be marketed. However, the RMA has defined marketed for purposes of the LRP-Feeder Cattle SCE to include those cattle that are expected to reach the target weight of the feeder cattle program and then be put into a feedlot for fattening. If the insured sells 60 days prior to the end of the insurance period, there is no claim and no premium refund.
- The market may dictate that you’re better off to keep those heifers than sell them. So if the market is down and you decide to keep them, you’re still covered, that’s just part of the policy.
6. Q. Is there a penalty if cattle do not reach the target weight?
- A. If the covered livestock do not meet the minimum allowed target weight, the number of covered livestock will be adjusted, unless you can establish that extraordinary circumstances caused the livestock to weigh less than the minimum target weight, for example, drought causing a lack of feed.
7. Q. Once the original LRP policy on feeder cattle expires, can an insured take out another policy on the same group of cattle:
- A. Yes, an insured can take out an additional LRP policy on the same group of cattle. For example, an insured intends to raise his/her calves up to 650 pounds and then sell them to someone else so he/she takes a LRP policy on this basis. However, once the cattle reach 650 pounds, he/she decides to keep the cattle and feed them out to slaughter weight because of a changing market and feed conditions. Once the original LRP policy expires, the insured could take another LRP-Feeder Cattle policy out on this same group of cattle and insure them up to a specified target weight.
8. Q. Are fed cattle required to go to slaughter at the end of the endorsement period?
- A. Yes, fed cattle are required to go to slaughter at the end of the endorsement period. Fed Cattle MUST be sold.
- Feeder cattle, on the other hand, are not required to be marketed at the end of the endorsement period as long as the insured retains ownership or places the cattle in a feedlot. In other words, for feeder cattle, you don’t actually have to sell any of the cows. You would have to prove ownership, with feed records, vet records, etc. (3rd party verification). This policy is buying coverage against the ups and downs of the market.
I would love to get you a quote if you are interested in this plan, so please reach out with any questions you may have.
Updated 5/24/2025
This information is not all inclusive and is meant to be used for general guidelines for educational purposes only. You the reader assume full responsibility for how you choose to use it. For additional information, please see crop provisions, reference the crop insurance handbook or loss adjustment manual, or contact your crop insurance agent. This institution is an equal opportunity provider and employer.