Livestock Gross Margin for Swine
The Livestock Gross Margin Insurance Plan for Swine (LGM-Swine) provides protection against the loss of gross margin (market value of livestock minus feed costs) on swine. Benefits are received when the difference between hog prices and feed costs at the time hogs are sold is less than the gross margin guarantee for the coverage period. Expected prices for hogs are set by the Chicago Mercantile Exchange lean hog futures. Corn and soybean meal prices are set by the Chicago Board of Trade futures. Up to 15,000 hogs can be insured per endorsement and 30,000 annually. Coverage levels are 80%, 85%, 90%, 95% or 100% of the expected gross margin.
There are twelve insurance periods in each calendar year. Each insurance period runs six months and no swine can be insured the first month of any insurance period. Coverage begins one full calendar month following the Sales Closing Date, unless otherwise specified in the Special Provisions, provided the premium for the coverage has been paid in full. For example, for the contract with a Sales Closing Date of January 31, coverage will begin on March 1.
LGM-Swine is available to all 50 states to all swine producers.
Livestock Gross Margin for Dairy Cattle
The Livestock Gross Margin for Dairy Cattle Insurance Policy provides protection against the loss of gross margin (market value of milk minus feed costs) on the milk produced from dairy cows. The indemnity at the end of the eleven month insurance period is the difference, if positive, between the gross margin guarantee and the actual gross margin. The Livestock Gross Margin for Dairy Cattle Insurance Policy uses futures prices for corn, soybean meal, and milk to determine the expected gross margin and the actual gross margin. The price the producer receives at the local market is not used in these calculations.
The insurance period contains the 11 months following the Sales Closing Date. For example, the insurance period for the January 29 Sales Closing Date contains the months of February through December. Coverage begins in the second month of the insurance period, so the coverage period for this example is March through December.
LGM-Dairy is available to any producer who owns dairy cattle in all 50 states.
Livestock Gross Margin for Cattle
The Livestock Gross Margin for the Cattle Policy provides insurance for the difference between the Gross Margin Guarantee and the Actual Total Gross Margin based on a producer’s Target Marketings and futures prices prior to and during the insurance period. This policy does not insure against death or other loss or destruction of cattle.
There are twelve insurance periods in each calendar year. Each insurance period runs 11 months, and no cattle can be insured during the first month of any insurance period. Coverage begins on your cattle one full calendar month following the Sales Closing Date, unless otherwise specified in the Special Provisions, provided the premium for the coverage has been paid in full. For example, for the contract with a sales closing date of January 31, coverage will begin on March 1.
LGM-Cattle is available to all 50 states.
Livestock Gross Margin - 2023 CY Changes
Livestock Gross Margin changes (CLICK HERE to review the Product Management Bulletin: PM-22-028) include:
- Expand LGM Cattle, Dairy, and Swine coverage availability to all 50 states.
- Allow an insured to have both an Livestock Risk Protection (LRP) and LGM policy; however, an insured may not insure the same class of livestock with the same end month or have the same insured livestock insured under multiple policies.
- Modify the premium offset language to allow an insured the choice to receive indemnities without a reduction to offset premium on any endorsements that have not ended.
This information is intended for informational purposes only. Nothing contained herein can or should be interpreted to take precedence over policy language, Federal Crop Insurance Corporation/Risk Management Agency regulation, and Underwriting or Loss Adjustment rules.