Livestock gross margin (LGM) insurance in Missouri
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In livestock production, gross margin is the difference between revenue from livestock or milk sales and feed costs. It is an indicator of profitability. Livestock gross margin (LGM) insurance offers livestock producers a way to manage gross margin risk by guaranteeing a minimum gross margin. If the gross margin guarantee at the beginning of the contract period is higher than the actual gross margin at the end of the contract period, the policyholder earns an indemnity. LGM insurance protects expected gross margin rather than a selling price, which is what livestock risk protection (LRP) insurance is for. It does not protect against risks such as disease or death. LGM insurance is administered by the U.S. Department of Agriculture (USDA) Risk Management Agency (RMA) and sold by approved livestock insurance agents. LGM insurance uses futures prices to determine the expected and actual gross margins. The RMA reports expected and actual gross margins for LGM policies at https://www3. rma.usda.gov/apps/livestock reports. Policies are available in Missouri for cattle, dairy and swine operations, but dairy operations participating in the Dairy Margin Protection Program are not eligible to participate in LGM-Dairy.
Archive version. For the most recent information see extension.missouri.edu.
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