Insurance Options for Protecting Your Livestock

Brown Beef Cattle
17 May 2023

Livestock and dairy producers carry a lot of risk in today’s markets, leaving them vulnerable to falling prices and increased costs. Insurance options exist to help livestock producers manage risk and protect their investments. Here is a rundown of some of the most available options.  

The Risk Management Association (RMA) offers various insurance options when it comes to livestock by offering Dairy Revenue Protection (DRP), Livestock Gross Margin (LGM), and Livestock Risk Protection (LRP). In addition, local Farm Service Agency (FSA) offices have made available Dairy Margin Coverage (DMC). 

Dairy Revenue Protection is designated to insure against unexpected declines in the quarterly revenue milk sales relative to a guaranteed coverage level. DRP offers two revenue pricing options: class pricing and component pricing. Class pricing uses a combination of Class III and Class IV milk prices as a basis for determining coverage and indemnities. Component pricing uses the component milk prices for butterfat, protein, and other solids for determining coverage and indemnities. 

Automated dairy

In comparison to DRP, DMC offers a production of the margin between milk and feed prices, while DRP protects a decline in milk prices only. DMC can be purchased in combination with DRP; however, DMC is only available at the local FSA office and DRP must be purchased through an insurance agent. 

Livestock Risk Protection is another great option designed to insurance against declining market prices. You can choose from a variety of coverage levels and insurance periods that match the time you would normally market your cattle. LRP is available on feeder cattle, fed cattle, and swine. You can purchase LRP in weekly endorsements of 13, 17, 21, 26, 30, 34, 39, 43, 47, or 52 weeks. 

An additional coverage option is LGM. This provides protection against a margin loss (market value of livestock minus feeder cattle and feed costs) and uses future prices to determine the expected gross and actual gross margin. LGM may be purchased weekly and provides protection on production you expect to market over a rolling 11-month insurance period. Coverage is available for cattle, dairy, and swine. 

If livestock is a valuable part to your operation, these insurance options should be considered. You can learn more about each of these programs by contacting your local AgCountry office. An insurance specialist will help you customize a policy that best first your operation and financial goals. 

Katie Lux
Written By: Katie Lux
Insurance Specialist - Stevens Point