Though the program has been around for 20 years, it had a slow start and, as recently as 2017, less than 100,000 head of cattle were enrolled, Zimmerman explains. In 2023, volume had increased to more than 5 million cattle. “The program absolutely has benefits to cattle producers, and it can serve as a valuable risk-management tool for producers, especially smaller producers where futures or options markets are not always the best tool for price protection,” he adds.
A CLOSER LOOK
Brad Kooima, president of Kooima Kooima Varilek Trading, in Sioux Center, Iowa, has been a cattle marketer for more than 40 years. He says several of his customers are using LRP as a marketing tool, and when it’s used for its intended purpose, it works well.
“The LRP contract is basically a put option. Fairly recently, the government decided to increase the subsidy much like they do with crop insurance. They have increased the subsidy by 35%. This is very attractive to smaller producers or cow/calf producers…
