Orlando Harmon
While it is uncommon to hear about calf insurance, it is not unheard of. In the context of livestock, calf insurance is a form of risk protection that covers live-born calves reported on a calf report. This type of insurance is often used by farmers and ranchers to protect their investment in calves, ensuring they receive compensation if the calf dies or is injured. Additionally, people in certain professions may choose to insure specific body parts that are crucial to their career, such as a concert pianist insuring their hands. This type of insurance functions similarly to car insurance, providing coverage for potential loss of earnings due to injury or damage to the insured body part.
| Characteristics | Values |
|---|---|
| What is being insured? | Calf prices |
| What is the insurance program? | Livestock Risk Protection (LRP) |
| What does LRP cover? | Lower prices |
| What is LRP's status? | Pilot program |
| What is the coverage period? | 13 to 52 weeks |
| What is the coverage price? | $116.61 per cwt |
| What is the premium cost? | $2.16 per cwt or $1.88 per cwt after subsidy |
| What is the floor price? | $114.73 per cwt |
| What is the calf report? | A record of both insurable and uninsurable live calves |
| What is the basis of coverage? | The most recent calf report submitted, including revisions |
| What is the coverage basis? | County where the calves were originally reported |
| What happens if calves are moved to another country? | Coverage ends and premium is due |
| What happens if calves are moved within the US? | Premium rate for the calves will be based on the higher rate between the original and new county |
| What is the Weaned Calf Risk Protection Program (WCRP)? | An insurance program that provides coverage for live-born calves reported on the calf report |
| Can calves be insured under both WCRP and LRP in the same county? | No |
| Can an insured elect WCRP in one county and LRP in another? | Yes |
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What You'll Learn
Calf insurance eligibility requirements
Livestock Risk Protection (LRP)
LRP is a federal insurance program that covers a single peril: lower prices. It is specifically designed for calves and offers some appealing features for producers. LRP does not have a minimum number of heads to cover, making it a cost-effective option. It also allows producers to cover calves under shared ownership arrangements. To determine eligibility, producers need to consider the expected end value and weight of the calves. LRP is often used for calves expected to weigh less than 600 pounds when the coverage ends. The coverage period can range from 13 to 52 weeks.
Weaned Calf Risk Protection Program (WCRP)
The WCRP is another insurance program that provides protection for calves. It has specific eligibility requirements that producers must meet:
- Live Birth: WCRP only covers live-born calves that are reported on the calf report.
- Reporting and Revisions: Producers must submit a calf report, including any revisions, by the final calf reporting date. The report should include both insurable and uninsurable live calves. Revisions to the report can be made as often as needed to report additional calf births.
- County-Based Coverage: WCRP is elected on a county-by-county basis. Insurance coverage is based on the county where the calves are originally reported. Each county requires a separate application and has its own premium rate.
- Spring-Born Calves: Calves born between February 1 and July 31 of the crop year are considered spring-born and are eligible for WCRP coverage. Calves born before February 1 are considered uninsurable as spring-born calves.
- Brood Cows: Producers must submit a Pre-Acceptance Worksheet (PAW) before the Sales Closing Date, providing the number of brood cows. To ensure future calves are eligible for WCRP coverage, the PAW must be revised to include these cows for subsequent crop years.
- Insurable Commodities: WCRP covers specific insurable commodities, including cow-calf under Whole-Farm Revenue Protection. Producers must meet eligibility requirements, such as commodity count, to utilize WCRP in conjunction with Whole-Farm Revenue Protection.
It is important to note that insurance programs and their eligibility requirements may vary based on location and specific regulations. Producers should carefully review the requirements of the insurance program they are considering to ensure their calves meet the necessary criteria for coverage.
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Calf insurance coverage
The LRP-Feeder Cattle policy, for instance, allows for adjustments in prices for steers weighing less than 600 pounds by the end date. This policy can be specified to cover calves expected to weigh below a certain threshold when the coverage ends. Additionally, LRP provides coverage for a single peril: lower prices. When the coverage ends, LRP pays an indemnity if the market price falls below the coverage price.
Another option for calf insurance coverage is the Weaned Calf Risk Protection Program offered by the Risk Management Agency (RMA). This program provides a new insurance option for livestock producers, specifically beef cow/calf producers, to protect against revenue losses on their calves up to weaning age. The program is currently being piloted in counties across Colorado, Nebraska, South Dakota, and Texas. Weaned Calf Risk Protection covers spring-born calves (February 1 through July 31) that are born on the producer's operation and meet specific feeder cattle grade requirements.
It's important to note that calf insurance coverage may vary depending on location and the specific terms of the insurance provider. Calf producers should carefully review the available options and consult with insurance agents or specialists to determine the most suitable coverage for their needs.
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Calf insurance premiums
The premium rates for the WCRP vary by county, and each county has its own separate policy and premium rate. The insurance coverage and premium rate are based on the county where the calves are originally reported. For example, if 100 calves are born and reported in County A, the coverage level, approved yield, and price will be based on County A's rates for the entire insurance period. If 25 of these calves are then moved to County B during the insurance period, they will be subject to County B's premium rate if it is higher than County A's rate.
To determine the premium rates for the WCRP, the RMA considers various factors, including the Chicago Mercantile Exchange (CME) feeder cattle futures and the Canadian dollar forward currency exchange rate. The RMA also offers a Livestock Risk Protection (LRP) insurance program, which allows cow-calf producers to purchase price protection for their fall calf crop. The LRP insurance coverage is based on the CME Feeder Cattle contract, and the premium subsidy rates have been increased to a minimum of 35%.
In addition to the WCRP and LRP programs, there may be other calf insurance options available, such as price insurance for calf crops. These insurance programs can help mitigate price risks and provide financial protection for calf producers. By insuring their calves, producers can manage their risks and protect their investment in their calf crops.
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Calf insurance claims
Calf insurance is a form of livestock risk protection that covers a single peril: lower prices. It is a pilot program with a small federal subsidy on the premiums. Insurance agents sell the policies. LRP coverage settles at cash prices, so there are no delivery concerns and generally reduced basis risk compared to other tools.
When the coverage ends, LRP pays an indemnity if the market price has fallen below the coverage price. For example, if the actual end value falls to $92 per cwt, then LRP would pay $3 per cwt or the difference between $92 per cwt and $95 per cwt. The end value is the national feeder steer price observed on the end date, with any price adjustment factors applied. The coverage comes at a cost. LRP premiums generally track options prices, with a small subsidy.
Producers can also cover calves under shared ownership arrangements with LRP. The coverage is available from 13 to 52 weeks, depending on whether underlying feeder cattle contracts are trading. A floor price is available for a given end date and type of cattle. Generally, the shortest end dates are routinely quoted. To assess the coverage available, a producer should decide when the cattle will be marketed or how long the coverage is desired.
Under the LRP-Feeder Cattle policy, prices for steers expected to weigh less than 600 pounds by the end date are adjusted by 110% of heavier steer prices. For steer calves, the expected end values can range from $125 to $115 per cwt, with corresponding floor prices ranging from $117 to $105 per cwt. For an end date of November 22, 2006, the expected end value was $123.21 per cwt, roughly 110% of the November feeder cattle futures price. The highest coverage level was just below 95%, giving a coverage price of $116.61 per cwt. The premium cost was $2.16 per cwt or $1.88 per cwt after the subsidy.
The Weaned Calf Risk Protection Program (WCRP) is another insurance program for calves. It provides coverage for live-born calves that are reported on the calf report. Calves born prior to February 1 should be listed on the calf report as uninsurable. The calf report is intended to be a record of both insurable and uninsurable live calves. Insurance coverage will be based on the county where the calves were originally reported. Therefore, coverage (e.g., coverage level, approved yield, price) will be based on County A for the entire insurance period for all 100 calves born and reported in County A. The highest applicable premium rate will apply.
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Calf insurance revisions
The Weaned Calf Risk Protection Program (WCRP) offers calf insurance with several key provisions. One notable aspect is the requirement for a calf report, which serves as a record of both insurable and uninsurable live calves. This report can be revised as often as needed to account for the birth of additional calves, ensuring that all calves are accurately accounted for. Revisions to the calf report can be made in person or by phone but must be confirmed in writing within 15 days to maintain compliance.
It's important to note that the WCRP only provides coverage for live-born calves that are reported on the calf report. Calves born prior to February 1 should be listed as uninsurable. Additionally, specific cattle types, such as Steers, Heifers, and Brahman, cannot be insured under both WCRP and other programs in the same county, except for LRP Fed Cattle. However, it is possible to elect WCRP in one county and LRP in another, allowing for flexibility in coverage.
Insurance coverage is determined by the county where the calves are originally reported, and the highest applicable premium rate will be applied. If calves are moved to a different county, the premium rate may change, and notice must be given to the AIP within 72 hours before the move. Coverage ends when calves are moved out of the country during the insurance period, and it cannot be reinstated if the calves are brought back to an insurable county.
In terms of pricing, LRP premiums generally track options prices and are paid when the coverage is purchased. The premium is subtracted from the coverage price to determine the floor price. For example, if the premium is $2 per cwt, the floor price would be $93 per cwt. It's worth noting that cattle prices and premiums are set based on national averages, and the selling price received by the producer does not impact the insurance.
Overall, these calf insurance revisions provide important details on reporting requirements, coverage limitations, premium rates, and pricing structures. By understanding and adhering to these provisions, producers can effectively manage their calf insurance policies and protect their investments.
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Frequently asked questions
The Weaned Calf Risk Protection Program (WCRP) is a program that provides insurance for calves.
The WCRP provides coverage for live-born calves that are reported on a calf report. It covers calves from 13 to 52 weeks.
Only spring-born beef calves will be insurable for the 2024 commodity year. Only cattle explicitly bred and raised for beef production will be insurable.
Insurance ends in the event of total destruction of the insured calves, final adjustment of a loss, abandoning the calves, putting the calves to an alternative use, sale of the calves, the calendar date the calves are weaned, moving the calves to another country, or the end of the insurance period.
The cost of calf insurance varies depending on the program and the specifics of the policy. For example, the premium cost for LRP coverage was $2.16 per cwt or $1.88 per cwt after the subsidy.
