Minimum price insurance programs for hog producers

CANADA - Two insurance programs offer minimum price guarantees on futures contracts
calendar icon 11 October 2007
clock icon 2 minute read

Pork producers face high financial risks from volatile markets. Those who want to manage their risks more efficiently might want to learn about two programs that can help establish a floor under hog prices.

Both currently are available through private insurance agents. Livestock Gross Margin (LGM) insurance and Livestock Risk Protection (LRP) insurance both offer several levels of minimum price guarantees based on lean hog, corn and soybean meal futures contracts.

Unlike futures contracts, though, these policies allow producers to insure any number of hogs for any marketing month. More information on both insurance programs is available in this online fact sheet on the ISU Ag Decision Maker web site.

An electronic decision tool that compares the risk protection available from Livestock Revenue Protection to results from futures contracts, options contracts, and the cash market is also available on Ag Decision Maker, at 50lrpanalysis.xls Since 2005, more than 3,500 U.S. swine producers have purchased either LGM or LRP policies to insure a selling price for over 2 million head of market hogs.

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