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Texas Agriculture Archive

November 4, 2005

LRP manages risk

By Tom Nicolette
TFB Media Services Director

Livestock insurance was one of several topics at a recent Wheat Pasture Cattle Workshop, cosponsored by Texas Farm Bureau, in Floyd County.

Livestock Risk Protection (LRP) sets a floor price on cattle, providing coverage for upside potential on a per head basis—making it flexible for producers. The coverage protects against downward price movement.

"There's no management required after getting a policy," said Cary Franks, a representive with ARMtech Insurance Services in Lubbock. "It's a premium up front and subsidized by the federal government at a 13 percent rate. It's tax deductible and it's tailored to fit any size operation below 2,000 feeder cattle or below 4,000 fed cattle herds."

Under the LRP, producers select a floor price based on 70-95 percent coverage of the expected ending value. They are assured the price they choose is the price they'll get—even if the market falls below that level. LRP does not cover mortality, condemnation or disease. Producers can choose coverage from 13 to 52 weeks.

"Price fluctuation affects producers' pocketbooks more than any other thing in the entire business. To me, that's a statement that says, `I need to think about the future. I need to think about next year, the year after that and provide some kind of protection against my investment'," Franks stressed.

Livestock covered by LRP range from steers and heifers to dairy cattle 600 pounds and below. From 600-900 pounds, feeder cattle can be insured while coverage can be applied to steers and heifers weighing in at 1,000-1,400 pounds. Swine—up to 32,000 head per year—can also be protected by LRP.

LRP is available to producers in Texas and 19 other states.