Livestock Gross Margin
Market-risk Protection for Dairy, Cattle, and Swine
Livestock Gross Margin (LGM) is a federally reinsured livestock product that provides coverage against the loss of gross margin. Its objective is to protect producers from declining prices and increasing feed costs.
How does Livestock Gross Margin work?
The LGM insurance policy uses futures prices to determine the expected gross margin
and the actual gross margin. Producers will receive a loss payment if there is a difference between the gross margin guarantee and the actual gross margin.
LGM coverage is available for dairy cattle, cattle, and swine. It is important to note that LGM coverage does not protect producers against livestock losses caused by disease or death
LGM for Dairy
- Provides protection against the loss of gross margin (market value of milk minus feed costs)
- Available in all counties in all 50 states for the commercial or private sale of milk intended for human consumption.
- Producers can insure during any 11-month insurance period or year.
- Sold each Thursday after the price guarantee is posted to the RMA site and ends the following day (Friday) at 9:00 AM Central
- Insurance coverage begins one month and one day following the sales closing date
- Premium is due at the end of the insurance periodDeductible amount available: $0 to $2 per hundred weight in 10¢ increments
- Premium subsidy is based on the deductible selected by the producer and ranges from 18% with $0 deductible to 50% with a deductible of $1.10 or greater
LGM for Cattle
- Provides protection against the loss of gross margin (market value of cattle minus feeder cattle and feed costs) on fed cattle (yearling and calf)-Available in all counties in all 50 states for yearling and calf finishing operations
- Producers can insure cattle during any 11-month insurance period and up to 10,000 head per insurance year (July to June)
- Sold each Thursday after the price guarantee is posted to the RMA site and ends the following day (Friday) at 9:00 AM Central
- Insurance coverage begins one month and one day following the sales closing date
- Premium is due at the end of the insurance periodDeductible amount available: $0 to $150/head in $10 increments
- Premium subsidy will be based on the deductible selected by the livestock producer.
- Subsidy will range from 18% with $0 deductible up to 50% with a deductible of $70 or greater or according to the actuarials
LGM for Swine
- Provides protection against the loss of gross margin (market value of hogs minus feed costs)
- Available to farrow-to-finish operations, feeder-pig finishing operations, and segregated-early weaned (SEW) operations in all 50 states
- 6-month insurance period following the sales closing date, with coverage beginning in the second month
- Sold each Thursday after the price guarantee is posted to the RMA site and ends the following day (Friday) at 9:00 AM Central.
- Premium is due at the end of the insurance period-Deductible amount available: $2 to $20 per head in $2 increments
- Premium subsidy will be based on the deductible selected by the livestock producer. Subsidy will range from 18% with $0 deductible, up to 50% with a deductible of $12 or greater or according to the actuarials.
How to purchase Livestock Gross Margin?
LGM is available through approved insurance provider SA Stone Wealth Management Inc. Brokers/agents of StoneX Financial Inc. - FCM Division, which focuses on livestock risk management, is registered with SA Stone to provide LGM to their clients.
Why purchase Livestock Gross Margin through StoneX?
LGM coverage is determined using futures and options prices from the Chicago Mercantile Exchange (CME) Group. This puts our price-risk management consultants in a unique position to:
- Help producers optimize LGM coverage to fit their operations and needs precisely
- Leverage LGM as part of a larger risk-management strategy that can help producers protect revenue, lock in profits, and potentially capture some upside
With rates and subsidy percentages the same across all agents, our decades of experience and access to deep market liquidity can make a decisive difference in making LGM work for you.
Click here to contact one of our LGM agents today.