These policies are designed to insure against declining market prices of livestock and not any other peril. Coverage is determined using futures and options prices from the Chicago Mercantile Exchange (CME) Group. Price insurance is available for swine, cattle, lambs and milk. Producers decide the number of head (cwt of milk) to insure and the length of the coverage period.
- Livestock Risk Protection (LRP) provides coverage against market price decline. If the ending price is less than the producer determined beginning price an indemnity is due.
- Livestock Gross Margin (LGM) provides coverage for the difference between the commodity and feeding costs. If the producer determined expected gross margin is greater than the actual gross margin, an indemnity is due.