Livestock Risk Protection Insurance: Swine Logan Haviland and Ryan Feuz
What are the specifics about swine insurance?
Livestock Risk Protection (LRP) specific coverage endorsements (SCE) can be purchased for swine up to an annual limit per producer of 750,000 hogs, with a maximum of 70,000 hogs per SCE. While that is the maximum per contract, producers can purchase LRP insurance contracts for as little as one head. Producers can purchase insurance for both born and unborn swine. Contracts for swine that are born before the start of the policy range from 13, 17, 21, 26, and 30 weeks, while contracts for swine born after the effective date of the policy range from 30, 34, 39, 42, 47, and 52 weeks (Risk Management Agency [RMA], 2022). Find general information about how the LRP insurance program works in the companion Utah State University Extension fact sheet titled “Livestock Risk Protection Insurance FAQ.”
What are the “optimal” coverage options?
LRP contracts that return an indemnity to a producer greater than the subsidized premium cost could be defined as having a positive net return. Those combinations of coverage length and level that have historically provided the highest probability of a positive net return while also providing the highest average net return could be defined as “optimal” contracts (Haviland & Feuz, 2022). Table 1 summarizes these optimal contracts for each marketing month (the month in which a producer intends to market livestock). LRP coverage lengths of 13, 17, 21, 26, and 30 weeks are shown, with coverage levels of 85%–100% split into 5 groups: • • • • •
1 = (85.00% - 89.99%). 2 = (90.00% - 92.49%). 3 = (92.50% - 94.99%). 4 = (95.00% - 97.49%). 5 = (97.50% - 100.00%).
The optimal contracts, already defined, are those cells within Table 1 shaded in gray and marked with an “X.” An online tool, Livestock Risk Protection (LRP) Support Tool (https://farmanalysis.usu.edu/lrp/), is available to help producers visualize which contracts are optimal based on their marketing month and specific commodity. The optimal contracts identified within Table 1 may not correspond directly to those identified using the LRP online decision tool. This discrepancy can arise as the online tool is continuously updated as new LRP data becomes available.
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