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Do you need LGM/LRP?


Fri, Nov 12th, 2010
Posted in Agriculture



Those initials certainly didn't mean much when I first saw them; they stand for Livestock Gross Margin and Livestock Risk Protection Insurance. Livestock Gross Margin Insurance provides protection against the loss of gross margin (market value of livestock minus feed costs) for Dairy (Milk), Feeder Cattle, Fed Cattle, Swine and Lambs.

For example, LGM Dairy Cattle provides protection to dairy producers when feed costs rise or milk prices drop. Gross margin is the market value of milk minus feed costs. LGM Dairy uses futures prices for corn, soybean meal, and milk to determine the expected gross margin and the actual gross margin.

LGM for Swine, Feeder Cattle, Fed Cattle, and Lambs works similarly. In all cases, the price the producer receives at the mailbox is not used in gross margin calculations. Livestock Risk Protection Insurance is a price only insurance policy that insures against a price fall and may be considered similar to a minimum pricing contract.

If you would like to learn more about LGM/LRP there will be a workshop on Friday, December 3, Room 108, Fillmore County Office Building, 902 Houston Street, Preston. Our presenter is Wendy S. Amundson, agri-business sales representative, Wells Fargo Insurance, Inc.

We will begin with the Beef and Swine LGM/LRP session at 9:30 until 11:30. At that time, participants can either leave for lunch or we can order sandwiches on a Dutch treat basis.

At 12:30 until 2:30 we have our session on Dairy LGM/LRP. Participants can come for both sessions or either one. There is no fee to attend this workshop.

For more information prior to the workshop, go on-line to http://www.rma.usda.gov/pubs/rme/fctsht.html.

For the Risk Management Agency's list of livestock price insurance providers in Minnesota, go to http://www3.rma.usda.gov/tools/agents/companies/2010/minnesotaLPI.cfm.

Space is limited. Please RSVP by Wednesday, December 1, by contacting one of the following: Dan B. Miller at dan@danbmiller.com, Wayne Pike at wcpike@myclearwave.net

Jack LaValla at jack.lavalla@riverland.edu, or Jerrold Tesmer at tesme001@umn.edu or call 507-765-3896.

The program is sponsored by Riverland Community College Farm Business Management, the University of Minnesota Extension, and Wells Fargo Insurance, Inc. "This will give you another tool in your marketing toolbox. It fits in with any size livestock operation. Many producers shy away from contracting because of the size of the contracts. These products have no upper or lower limits so can benefit almost everyone who is interested."

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