Web Site Explains Livestock Gross Margin Insurance

A new University of Nebraska-Lincoln Web site will help livestock producers and insurance agents learn more about the relatively new Livestock Gross Margin insurance for cattle and swine.

UNL Extension in partnership with the North Central Risk Management Education Center developed several educational materials available on the new Web site at www.livestockinsurance.unl.edu. "The UNL Livestock Insurance Web site can provide important information to producers, insurance agents and educators as they learn how to use livestock insurance products as a risk management tool for their livestock operations," says Darrell Mark, UNL livestock marketing specialist. With cattle feeders and swine finishers experiencing increased volatility in both the markets in which they sell their livestock and purchase their inputs like corn, many producers hedge, or insure, these price differences to reduce their risk. LGM insurance became available in 2006, following another livestock insurance product called Livestock Risk Protection. In addition to information dealing with LGM insurance, Web visitors also can find information comparing LGM to LRP. Several UNL Extension NebGuides and Extension Circulars are available detailing the underwriting rules, policy provisions and practical hedging use for LGM and LRP insurance for fed cattle, feeder cattle and swine. In addition, the site features two home study courses, one for LGM and one for LRP. Each contains video lectures, slides and text organized into five chapters of information. Topics include a basic overview of the program and policy provisions, how the insurance works for hedging, basis and purchasing considerations, and hedging outcomes using the insurance product under different market conditions. The Web site also contains an in-depth analysis of basis risk associated with LGM and LRP insurance, which differs from traditional basis risk. In addition, several other links are available to learn more about issues and information associated with LGM and LRP, a glossary, frequently asked questions and examples of all policy forms. To obtain the video lecture series on DVD or obtain all the materials online without costs, visit the Web at livestockinsurance.unl.edu.

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