Livestock Gross Margin Dairy Insurance

Livestock Gross Margin Dairy Insurance (LGM-Dairy) is an insurance policy approved by the USDA Risk Management Agency available for dairies. LGM-Dairy helps protect your farm’s margin against unexpected declines in milk price or rises in feed costs (IOFC = milk revenue less the feed costs).

LGM-Dairy premiums depend on producers’ marketing plan, coverage selected, deductible level, futures prices and volatility. Producer premiums are average of expected long-run indemnities at sign up.

 How we can help:

  • Monitor your contracts performance against the Class III Milk, Soybean and Corn futures.
  • Explain how to incorporate LGM into a viable marketing plan. This will allow you to look at month-by-month margin guarantees between Milk Prices and Feed Costs and will act as a hedge for your cash flow and financial projections.
  • Convert your lactating cow ration to Corn and Soybean Meal equivalents to help you incorporate your feed rationing into your LGM-Dairy contract.
  • Show you available tools that will allow you to calculate scenarios. These scenarios will show what results you can expect for the next contract period, helping you to find the level of risk management that is right for you and your cash flow.

Find out more about Livestock Gross Margin Dairy Insurance. Contact Us or call 1-866-577-1831. Find out more information on our other insurance offerings.

How Is Your Farm's Margin Calculated?

Farm Margin Calculation

RMA Changes to LGM-Dairy, effective December 17, 2010:

  • Premium Payments will be due at the end of the coverage period.
  • Premium subsidy will be applied for those policies that insure multiple months during the insurance period. The subsidy will be based on both the length of the insurance period and the deductible level selected. With the subsidies ranging from 18% subsidy applied to insuring more than 1 month up to a 50% subsidy applied to insuring more than 1 month with a $1.10 or greater deductible selected.
  • No producer premium subsidy is available for this insurance program, though all administrative & policy subsidies are paid by the federal government.
  • Deductibles will be increased to $2.00 per cwt from the existing maximum of $1.50 per cwt deductible currently in place. Additional feed expense calculations allowed:
    1. Default, the 0.5 bu of corn per cwt and 4 lbs of soybean meal per cwt.
    2. “Your Ration,” where your ration is converted to corn and soybean meal equivalents.
    3. Maximum, which mimics the highest ration allowed.
    4. Minimum, which mimics the lowest ration allowed.