Livestock Gross Margin Program
Livestock Gross Margin (LGM) - Swine
Livestock Gross Margin provides revenue protection. It's specifically designed
to help protect your profit margin. You receive benefits when the difference
between hog prices and feed costs at the time your hogs are sold is less than
the gross margin guarantee for the coverage period. Expected prices for hogs
are set by the Chicago Mercantile Exchange lean hog futures. Corn and soybean
meal prices are set by the Chicago Board of Trade futures. Up to 15,000 hogs
can be insured during each insurance period. You may select a level of coverage
of 80%, 85%, 90%, 95% or 100% of the expected gross margin.
There are twelve insurance periods in each calendar year. Each
insurance period runs six months and no swine can be insured the first month of
any insurance period. Coverage begins on your swine one full calendar month
following the sales closing date, unless otherwise specified in the Special
Provisions, provided the premium for the coverage has been paid in full. For
example, for the contract with a sales closing date of January 31, coverage
will begin on March 1.
Livestock Gross Margin (LGM) - Cattle
The Livestock Gross Margin for the Cattle Policy provides insurance
for the difference between the Gross Margin Guarantee and the Actual Total
Gross Margin based on a Producer’s Target Marketings and futures prices prior
to and during the insurance period. This Policy does not insure against death
or other loss or destruction of cattle.
There are twelve insurance periods in each calendar year. Each
insurance period runs 11 months, and no cattle can be insured during the first
month of any insurance period. Coverage begins on your cattle one full calendar
month following the sales closing date, unless otherwise specified in the
Special Provisions, provided the premium for the coverage has been paid in
full. For example, for the contract with a sales closing date of January 31,
coverage will begin on March 1.
Livestock Gross Margin (LGM) - Dairy Cattle(Milk)
The Livestock Gross Margin for Dairy Cattle Insurance Policy provides protection against the
loss of gross margin (market value of milk minus feed costs) on the milk produced from dairy cows.
The indemnity at the end of the eleven month insurance period is the difference, if positive,
between the gross margin guarantee and the actual gross margin. The Livestock Gross Margin for
Dairy Cattle Insurance Policy uses futures prices for corn, soybean meal, and milk to determine the
expected gross margin and the actual gross margin. The price the producer receives at the
local market is not used in these calculations.
The insurance period contains the 11 months following the sales closing date.
For example, the insurance period for the January 29 sales closing date
contains the months of February through December. Coverage begins in the
second month of the insurance period, so the coverage period for this example is March through December.
This information is intended for informational purposes only. Nothing contained herein can or should be
interpreted to take precedence over policy language, Federal Crop Insurance Corporation/Risk Management Agency regulation, and Underwriting or Loss Adjustment rules.
Last Updated March 2011
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