Livestock Risk Protection - Lamb
Aug 7, 2009
Q: What is Livestock Risk Protection-Lamb (LRP-Lamb)?
A: The LRP-Lamb Insurance Policy provides protection against unexpected lamb
price declines. An economic model is used to predict the expected price of lambs
each week. An indemnity is paid if the actual national weekly average lamb price - using
the “calculated formula live price” - calculated from prices posted by
USDA’s Agriculture Marketing Service (AMS) - is less than the expected price. The price
that the producer actually receives for his or her own lambs is not part of the
Note: The "Calculated Formula Live Price" is: formula prices established for
previously slaughtered lambs (carcass basis) multiplied by the weighted average
dressing percent. These price data are published each Friday at:
Q: Who is eligible to purchase LRP-Lamb?
A: Any producer who owns lambs in the following 28 states: Arizona, California,
Colorado, Iowa, Idaho, Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri,
Montana, Nebraska, New Mexico, Nevada, North Dakota, Ohio, Oklahoma,
Oregon, Pennsylvania, South Dakota, Texas, Utah, Virginia,
Washington, West Virginia,
Wisconsin and Wyoming, is eligible for LRP-Lamb coverage.
Q: What are some of the key features of the LRP-Lamb Insurance Policy?
A: LRP-Lamb provides producers and feeders of lambs with the opportunity to
insure the lambs they own against an unexpected decline in price. The LRP-Lamb
Coverage Price and corresponding Actual Ending Value are both prices that are
calculated based on an econometric model composed of slaughter lamb prices,
actual slaughter under Federal inspection, live weight, pelt price, a moving
average seasonal index and other variables. Producers and feeders may continue
to market their own lambs through their own market channels and at the
maximum price they can negotiate, however the actual price received by a
producer is not used with respect to the insurance.
LRP-Lamb will be offered for sale each week from Monday morning through
7:00 PM central time. Producers can choose between three endorsement periods
(13, 20, 26, or 39 weeks) to best suit their own production and feeding systems. LRP-Lamb
insurance coverage prices and rate estimates may be available for review on
the RMA website beginning on Friday evening. However, rates and coverage
prices may be modified prior to sales beginning on Monday morning so the final
rates and coverage prices may be different than the estimates that may have been
provided over the weekend.
Q: Where can LRP-Lamb insurance be purchased?
A: LRP-Lamb is available through a crop insurance agent authorized to sell
Q: How much coverage of the LRP-Lamb expected price can be purchased?
A: Producers can purchase as little as 80-percent coverage and as much as 95-
percent coverage of the price in 5-percent increments. Coverage prices will be
listed for each coverage level for each of the endorsements (13, 20, 26, or 39 weeks)
during the sales period each week.
Q: Does it matter if lambs are sold directly off pasture or finished in a feedlot?
A: No, individual production systems are not a factor.
Q: Must lambs be owned at the time of purchase for LRP-Lamb insurance?
A: Yes. You must own the lambs for which you purchase price insurance, and the
lambs must be located in one of the pilot states when insurance attaches.
Q: Does it matter if the market weights of lambs don’t match the weights of lambs
quoted by AMS in its weekly average national formula purchase lamb price report?
A: No. The weights quoted by AMS are a function of the marketplace at any
given time. A producer is not paid an indemnity based upon his actual lamb
weights or his actual price.
Q: Do lambs have to be sold on the day the policy expires?
A: No. An endorsement period should be chosen that most closely matches the
producers production or feeding program. Ownership of the lambs must be
maintained up to the last 30 days of coverage for the Specific Coverage
Endorsement, otherwise coverage will be terminated and no indemnity will be
paid on that portion of the endorsement.
Q: Does it matter if lambs go directly to slaughter when they are sold or when the policy
A: No. Producers and feeders regularly market lambs in a variety of ways; lambs may go directly to
slaughter or be grazed or placed on feed for a time before proceeding to actual slaughter. Insured lambs
can be marketed through any manner chosen so long as the lambs are in marketing channels where they are
expected to eventually be slaughtered (includes lambs not yet weaned and lambs on feed).
For more information, contact William (Bill) Bing.