About LRP Insurance
Livestock Risk Protection (LRP) is a federally-subsidized insurance product administered by the USDA Risk Management Agency (RMA). It pays an indemnity when the national Actual Ending Value of a covered livestock class falls below the producer's selected Coverage Price.
How a quote is built
- Pick a commodity (Feeder Cattle or Fed Cattle) and class (e.g., Steers Weight 1).
- Pick an endorsement length (the number of weeks until coverage ends).
- Pick a coverage level (70% – 100% of the Expected Ending Value).
- RMA publishes a Coverage Price ($/cwt) and a Cost-per-CWT (gross premium per cwt).
- USDA pays a portion of the premium as a subsidy; you pay the rest.
Subsidy schedule
| Coverage level | Federal subsidy |
|---|---|
| 95% – 100% | 35% |
| 90% – <95% | 40% |
| 85% – <90% | 45% |
| 80% – <85% | 50% |
| 70% – <80% | 55% |
Formulas
- Insured CWT = Head × Coverage Level (cwt)
- Total Liability = Coverage Price × Insured CWT
- Gross Premium = Cost/CWT × Insured CWT
- Producer Premium = Gross Premium × (1 − Subsidy Rate)
- Indemnity = max(0, Coverage Price − Actual Ending Value) × Insured CWT
- Net = Indemnity − Producer Premium
- Break-Even Ending Price = Coverage Price − Producer Premium per CWT