RMA changes livestock insurance
The Agriculture Department’s Risk Management Agency (RMA) on Tuesday announced that changes to its Livestock Risk Protection (LRP) insurance plan will take effect on January 20 for crop year 2021 and succeeding crop years. These changes have been talked about for several months, and were announced in September, but not put into effect until last week.
“We are always looking for feedback from producers and other stakeholders,” said RMA Administrator Martin Barbre. “These changes are a direct reflection of that feedback and will improve LRP coverage for producers in 2021 and beyond.”
▪ Increasing livestock head limits for feeder and fed cattle to 6,000 head per endorsement/12,000 head annually and swine to 40,000 head per endorsement/150,000 head annually.
▪ Modifying the requirement to own insured livestock until the last 60 days of the endorsement.
▪ Increasing the endorsement lengths for swine up to 52 weeks.
▪ Creating new feeder cattle and swine types to allow for unborn livestock to be insured.
According to Tait Berlier, AgRisk Adviser, Livestock Risk Protection has received a multitude of updates over the past two reinsurance years, beginning in July of 2019 when RMA provided a subsidy increase, expanded coverage limits and additional endorsement lengths.
In July of 2020, RMA again provided an increase to subsidy levels.
Also the premium payment is now due at the end of the coverage period. Berlier believes that change is especially important for cash flow purposes on the ranch – “you can now hold the price coverage and not owe premium until after you’ve sold the cattle,” he points out.
In September of 2020, RMA announced again that producers should expect additional, forthcoming improvements to LRP. In September, USDA also announced another subsidy increase, a doubling of the coverage limits for cattle, more flexibility in the livestock ownership requirement, and allowing for price coverage on unborn calves and swine.
The sum of these incremental changes is huge, said Berlier. “Starting now, a cow-calf producer could lock in 105 percent of the lightweight feeder offers, be free to market that animal throughout the summer, and owe no premium for the coverage until the calf is sold in the fall. With a 35-55 percent subsidy level, the cost of the coverage has decreased significantly. Sharp cattle producers have known about LRP for a long while and have used it effectively,” he said.
Berlier said he and his AgRisk team believe these changes make LRP something that absolutely must be considered by producers of all types. “Commodity producers are typically price takers in the markets – they owe it to themselves to guarantee the best price offered for the products they and their families work so hard to produce,” he said.
“Administrator Barbre has always been ‘all-ears’ and is focused on what producers have to say about the programs RMA administers. We appreciate the heck out of this attitude as the upgrades to LRP make this program a real game changer for cattle producers,“ said Berlier.
–The Hagstrom Report and Carrie Stadheim reporting
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In response to the severe drought conditions in the West and Great Plains, the Agriculture Department this week announced that plans to help cover the cost of transporting feed for livestock that rely on grazing.