Livestock Gross Margin

Livestock Gross Margin (LGM) is a federally-reinsured livestock product that provides protection against the loss of gross margin.

The RMA monitors capacity levels, and when the funding limit has been reached, sales for this product will cease.

New for RY2022

• For all LGM products: Modified Expected Price Measurement Period definition and Sales Period definition to allow for weekly sales. The sales period begins each Thursday after the price guarantee is posted to the RMA site and ends the following day (Friday) at 9:00 AM Central.

Recent Updates

• Cattle & Swine: Premium is due at the end of the insurance period or according to the actuarials.
• Cattle: Premium subsidy will be based on the deductible selected by the livestock producer. Subsidy will range from 18% with $0 deductible up to 50% with a deductible of $70 or greater or according to the actuarials.
• Swine: Premium subsidy will be based on the deductible selected by the livestock producer. Subsidy will range from 18% with $0 deductible up to 50% with a deductible of $12 or greater or according to the actuarials.

LGM – Cattle

LGM – Cattle provides protection against the loss of gross margin (market value of cattle less feeder cattle and feed costs) on fed cattle (yearling and calf). The policy uses futures prices to determine the expected gross margin and the actual gross margin. LGM does not insure against death, loss, or any other loss or damage to the producer’s cattle. LGM – Cattle is a bundled option that covers both the cost of feeder cattle and the cost of feed. This effectively insures the producer gross margin (difference between the gross margin guarantee and the actual gross margin at the end of the 11-month insurance period).

LGM – Dairy

LGM – Dairy Cattle provides protection against the loss of gross margin (market value of milk less feed costs) on the targeted quantity of market milk. The policy uses futures prices to determine the expected gross margin and the actual gross margin. LGM does not insure against death, loss, unexpected decrease in milk production or unexpected increases in feed use. The mix of target milk marketings and target feed rations allows a producer to select feed rations and production levels that best reflect their actual production. This effectively insures the producer gross margin (difference between the gross margin guarantee and the actual gross margin at the end of the 11-month insurance period).

LGM – Swine

LGM – Swine provides protection against the loss of gross margin (market value of hogs less feed costs). The LGM insurance policy uses adjusted futures prices to determine the expected gross margin and the actual gross margin. The policy does not insure against death, loss, or any other loss or damage to the producer’s hogs. LGM – Swine is a bundled option that covers both the cost of hogs and the cost of feed. This effectively insures the producer gross margin (difference between the gross margin guarantee and the actual gross margin at the end of the 6-month insurance period).

Coverage

The sales period begins each Thursday after the price guarantee is posted to the RMA site and ends the following day (Friday) at 9:00 AM Central.

Deductible:

• Cattle: $0 – $150 per head (in $10 increments)
• Dairy Cattle: $0 – $2 per hundredweight of milk (in 10 cent increments)
• Swine: $0 – $20 per head (in $2 increments)

Premium Subsidy

• Cattle: Based on the deductible selected by the livestock producer. Subsidy will range from 18% with $0 deductible up to 50% with a deductible of $70 or greater or according to the actuarials.
• Dairy Cattle: Based on the deductible selected by the producer and ranges from 18% with $0 deductible to 50% with a deductible of $1.10 or greater.
• Swine: Based on the deductible selected by the livestock producer. Subsidy will range from 18% with $0 deductible up to 50% with a deductible of $12 or greater or according to the actuarials.

The information contained in this publication is for general purposes only and shall not modify the terms of any insurance policy.