LGM-Dairy now available Livestock gross margin insurance for dairy (LGM-Dairy) will be available beginning with the 2009 reinsurance year, said USDA’s Risk Management Agency.
LGM Dairy protects producers against the loss of gross margin – or the market value of milk minus feed costs – on milk they produce. The indemnity at the end of the 11-month insurance period is the difference between the gross margin guarantee and the actual gross margin, if it’s positive.
Because LGM-Dairy covers the cost of both milk and feed, it’s different from traditional options. The policy uses futures prices and state basis for corn and milk to determine expected and actual gross margin.
It may be tailored to any size farming operation. The producer supplies the mix of target milk marketings per dairy cow and target feed rations. That allows the producer to choose feed rations and production levels that best reflect actual production situations.
LGM-Dairy does not insure against dairy cattle death loss, unexpected decreases in milk production or unexpected increases in feed use.
Producers may sign up 12 times per year and insure up to 240,000 hundredweight per year. It will be sold on the third to last business day of each month.
Producers must supply the total number of tons of corn or equivalent and and protein meal or equivalent they expect to feed for each month in which they insure their milk.
Producers in the Northeast states of Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Connecticut, Delaware, Pennsylvania, Rhode Island, Vermont and West Virginia are eligible, as well as those in some other states in the Midwest and West.
For more information, go to www.rma.usda.gov/news/2008/05/lgmdairy.html