The insurance policy was designed to protect producers from declines in lamb prices.
Sales of Livestock Risk Protection insurance for lambs (LRP-Lamb) resumed on April 24. LRP-Lamb has not been available for about one year while revisions were made to the program.
LRP-Lamb is a single-peril price insurance policy offered by the U.S. Department of Agriculture’s Risk Management Agency (RMA) and is sold by livestock insurance agents (who also sell crop insurance). A list of approved agents is available on the RMA website at http://bit.ly/LRPapprovedagents.
“LRP-Lamb was designed to protect lamb producers from declines in lamb prices,” says Tim Petry, North Dakota State University Extension Service livestock economist. “It is available to producers in North Dakota, Minnesota, Montana, South Dakota and other lamb-producing states.”
Lamb producers who are considering purchasing LRP first must submit a one-time application for approval. Once a policy is approved, producers are eligible to purchase specific coverage endorsements (SCE). Each SCE will cover up to 2,000 head of lambs weighing 50 to 150 pounds. The annual limit per crop year, which is July 1 through June 30, is 28,000 head.
LRP-Lamb will be available once a week on Monday from 10 a.m. to 7 p.m. Central time.
Coverage prices, ranging from 80 to 95 percent of the lambs’ expected ending value, will be available on the RMA website at http://bit.ly/LRPcoverageprices.
Premiums, which must be paid to the insurance agent before a SCE is submitted, are subsidized 13 percent by the USDA and also will be shown on the same RMA website. Beginning farmers may receive a 23 percent subsidy.
Lamb producers may select coverage prices for 13-, 26- or 39-week insurance periods, which should correspond to the actual marketing date for lambs. Because lambs must not be sold until 30 days prior to the maturity date, selecting the appropriate policy length is important, Petry says.
On the maturity date, if the actual ending value is below the coverage price, an indemnity for the difference will be paid to the producer. The actual ending price reported for the week of April 21 was $140.66 per hundredweight (cwt).
On April 24, the 95 percent coverage price for the 26-week contract was $136.525/cwt, with a subsidized premium of $5.15/cwt. and a maturity date of Oct. 23, 2017.
The American Sheep Industry Association has a LRP online education course available at http://bit.ly/LRPcourse. It was designed for producers and insurance agents to learn more about LRP and to assist with the decision to purchase insurance.
An educational presentation on LRP-Lamb is available on the NDSU livestock economics website at https://www.ag.ndsu.edu/livestockeconomics/presentations.
LRP also is available for feeder cattle, fed cattle and swine. Basic LRP policies, handbooks, frequently asked questions and fact sheets, as well as underwriting rules and premium calculation worksheets for lambs, cattle and swine, are available on the RMA website at www.rma.usda.gov/livestock.