– Dr. Andrew Griffith, Assistant Professor, Department of Agricultural and Resource Economics, University of Tennessee
Questions concerning price risk management are fairly regular in this line of business. It is prudent to inform producers that changes have been made to the Livestock Risk Protection insurance program.
The change that will likely have the most impact is the increased subsidy. LRP will now be subsidized 20 to 35 percent depending on the coverage level which is up from the original 13 percent subsidy. In other words, the cost of purchasing price insurance will be lower.
The second most useful change with be the increased number of insurance options that are made available each day. The original setup of LRP limited the number of alternatives in that there were few useful alternatives on a given day and sometimes all the insurance alternatives were of little use.
A less useful change to the program is increasing the maximum number of head a producer can insure in a year. The maximum number of head increased from 2,000 head to 6,000 head. This change may be of concern to a few people, but not many people.