Many in the livestock sector have been espousing the benefits of government-sponsored insurance programs over the past several years, and for good reason. Livestock Risk Protection is an insurance product designed to protect against a decline in market price. Livestock Gross Margin for Swine provides protection against the loss of gross margin of swine (market value of livestock minus feed costs).
Both programs have been in existence since 2003 but modifications to the program (highlighted here, here and here) have increased their usage over the past several years. Today, they serve as an important tool in many producers’ risk management arsenal.
The USDA’s Risk Management Agency defines crop years for livestock insurance products as the 12-month period, beginning on July 1 and ending on the following June 30. During the most recently completed crop year, which ended June 30, 2023, more than 14 million pigs were protected with LGM and more than 22 million head of swine were protected with LRP.
Figure 1. Livestock Insurance Participation
The use cases for the programs are relatively straightforward as they are customizable and generally cost effective. LGM is offered once per week and LRP is…
