What is LRP
Livestock Risk Protection otherwise called LRP is a federally cost shared insurance product designed to protect livestock producers from declining market prices of feeder cattle, fed cattle or swine. It is available for purchase most days, year round. It provides coverage if, on a selected ending date the market prices for your insured livestock fall below a coverage price chosen by you. The USDA developed this product as a way for small to mid-size producers to protect their profit margins. LRP contracts are very similar to put options commonly traded on the Chicago Mercantile exchange. Because of the high margin requirements and large contract sizes of put options, it restricts what a producer can do to protect smaller groups of livestock. The LRP contracts are designed to be an easy, cost-effective way to manage price.