WYOBRASKA – Many federal programs have had changes over the past year. The Livestock Risk Program has changed for the better.
The Livestock Risk Program is “a single federal insurance program offered and subsidized through the Risk Management Agency (RMA),” said Vanessa Reishus, Insurance Services Officer at Farm Credit Services of America. It is a program designed to insure against declining market prices for both fed and feeder cattle.
“It just basically puts a floor on the market for them at the period when they intend to sell the cattle. And, also, they don’t have to sell them. If they choose an end period and then decide to not sell for whatever reason, if there’s a payable loss, they still get paid,” said Reishus. “The price that they have locked in once that coverage period ends, if the ending actual ending figure is below that, then they get a payment.”
“It protects producers from adverse price changes in the livestock market, feeders up to 900 pounds and fed cattle up to 1,400 pounds,” said Reishus. “The feeders are generally in lower weight. So, there’s classes up to 600 pounds and then from 600 to the 900. Fed cattle are generally over 1,000 pounds to 1400.”
This program is available for year-round registration and can be purchased daily after the market closes. Producers can cover up to 6,000 head at a time with a maximum of 12,000 head per crop year.
“The coverage periods are from 13 to 52 weeks in one-month intervals. Those are subject to change in length of coverage periods offered or program availability due to extreme market changes, or when government funding limits are reached,” said Reishus.
“The first information, we just need to submit an application with just their general information,” said Reishus. “
Then after that, once they decide to lock in a price, it’s called a specific coverage endorsement. And then that’s where we say, this is where the cattle are located, this is how many, and this is what type.”
“There’s just one application for the insurance here. But then you could do multiple SC E’s or specific coverage endorsements under that single application. The insurance here begins on July 1,” said Darrin Clarkson, Regional Vice President at Farm Credit Services of America. “If a customer had done an application today and never made a decision on anything, or didn’t cover anything, then we get into July or August, and they want to do something, they would have to do a new application for the new crop year.”
This program is not new; however, this year has brought many changes.
“It’s been around for a number of years, but they have made significant changes to it as of January this year, so it is becoming a lot more popular. Part of that being the subsidized amount went from 13% to 35%. In some cases, so it actually is now significantly cheaper,” said Reishus. “They also changed the amount of time that you had to have ownership of the cattle prior to the end date. And that used to be 30 days, and that’s extended to 60. “
Another change was the maximum amount of cattle that can be covered during the year. Reishus said, “They also doubled the amount of head that we can cover, it was 6000 per year. Now it’s 12,000.”
In addition, unborn calves can now be covered as well. “Yeah, so it is actually available on feeders prior to calves even being on the ground,” said Clarkson.
Producers will also have more time to pay their premium under the new rules. “Premium due date was pretty significant, as well. The premium used to have to literally accompany that specific coverage endorsement. Now, premium is not due until the end of the insurance period,” said Clarkson. “So, it’s similar to other federal crop policies now where it’s not due until later, not upfront.”
Even if a producer is not ready to make the purchase right now, it is still important to file the initial application. Clarkson said, “We do encourage people, if they are interested in the product, to go ahead and complete the application right away. And then at the point in time that they would choose to do something, they’ve gotten that part out of the way and they’re just focused on making that buying decision.”