Laketown, Utah, April 25, 2018: USDA recently announced significant improvements to the Livestock Risk
Protection Insurance Plan (LRP), a program that allows cattle producers to insure against unexpected price
LRP allows producers to insure between 70% and 100% of the projected price of their cattle. The projected
price is based upon feeder cattle futures prices and varies depending upon the type of cattle (e.g., steers or
heifers) and the weight of the cattle. The insurance coverage can be matched to the time that the cattle would
typically be sold. For example, a producer calving in April and then marketing in September would typically
obtain a policy that provides protection against price declines from April through September. LRP provides
coverage for cow/calf, stocker, and feedlot operations.
Frequently, producers brought up their desire to better protect themselves when prices fall. While they believed
that LRP was an outstanding fit for their operation, during conversations with hundreds of producers, two
complaints commonly arose. First, they wished LRP cost less, and, second, they wanted more coverage options
that coincided with the months they were selling their livestock.
Nearly two years ago, Brandon Willis and Aaron Tattersall, two agents who work with western livestock
operators, brainstormed on ways to overcome these problems. Making changes of this magnitude typically
doesn’t begin with an agent, but these agents have unique backgrounds that played a key role in the effort.
Tattersall from AgRisk Advisors, is an agent of Silveus Insurance Group and was one of the first agents
advising western ranchers on risk management opportunities. Willis from Ranchers Insurance LLC was the
head of USDA’s Risk Management Agency from 2013-2017 where he oversaw USDA’s insurance programs,
including LRP for the U.S. Secretary of Agriculture.
LRP, like many of USDA’s insurance products, was developed by the private sector and then approved and
reinsured by USDA, operating like all other USDA insurance products. In early 2018 Willis reached out to
LRP’s developer who was already considering some improvements and graciously agreed to request additional
changes to LRP if the agents provided some assistance with the process. Willis helped draft certain changes and
Tattersall worked with cattle ranchers across the U.S. to demonstrate strong support for these changes. Support
for the changes came from state and national producer groups, crop insurance companies, insurance agencies,
and state secretaries and directors of agriculture from Montana and Pennsylvania,
On Monday these efforts paid off as USDA announced that it had approved changes that significantly improve
LRP. “These improvements are directly tied to what cattle ranchers requested. The developer of LRP and
USDA deserve a lot of credit for these improvements,” said Willis.
USDA announced the following LRP improvements would be made:
• Increased LRP subsidy from the current 13 percent for all coverage levels to a range from 20 percent to
35 percent based on the coverage level selected;
• Updated the Chicago Mercantile Exchange trading requirements to allow for more insurance
endorsement lengths to be offered for producers to purchase;
• Increased per head and annual head limits – fed cattle and feeder cattle: 3,000 head per endorsement
and 6,000 head annually;
|Cost Reduction||13%||20-35% (Depending upon coverage level)|
|Max # of Head Insured Annually||2,000||6,000|
|# of Insurance Options Available||Limited||More|
What do these changes mean for a cow-calf producer? A producer insuring 500 calves that will be marketed
at 550 pounds could expect to pay around $7,700 for coverage that begins in April and ends in October if they
covered approximately 95% of the projected prices. Once the changes take effect the cost would be
approximately $1,000 less.
The combination of reduced cost and additional options will mean that LRP is a tool beef producer should
strongly consider. “Margins are too tight to not take these changes seriously. Having a tool that directly
addresses price volatility directly addresses what so many producers need,” said Tattersall.
Producers who are interested in learning more about LRP should reach out to a USDA-approved insurance
agent. A list of agents can be found on RMA’s website under “find an agent.” Tattersall can be reached at (303)
539-9300 and Willis can be reached at (866) 374-0864.