Project Overview
USDA Risk Management Agency announced approval of the Livestock Gross Margin (LGM) Insurance Program for cattle in November 2005, and began insurance sales in January 2006. While LGM insurance had been available for swine in Iowa for several years, LGM insurance for cattle was a new risk management tool. Further, it was made available in twenty states, including those states with the largest cattle on feed inventories (i.e., Texas, Nebraska, Kansas, Colorado, Iowa). LGM insurance provides price risk protection on the difference between fed cattle selling prices and feeder cattle and corn purchase prices. By insuring this feeding margin, producers can hedge against decreases in profits per head.
This education project addressed both producer and crop insurance agent needs for education and training on LGM insurance. It focused on providing crop insurance agents with LGM policy information, underwriting rules, and background on livestock marketing relevant to feeding margins. Livestock producers received instruction on the use of LGM for hedging against changing feeding margins. This is a key area of education to address because hedging margins (e.g., price spreads) are a complex topic yet they are closely related to producer profitability. Further, before LGM, these margins could only be hedged through the use of multiple positions in futures/options derivatives.
The educational effort was comprised of six insurance agent and producer workshops conducted throughout Nebraska, Kansas, and Colorado and a distance education program. The distance education program included video lectures and self-study guides available through a dedicated website. This educational program parallels the structure of the Livestock Risk Protection (LRP) Insurance educational program conducted by University of Nebraska-Lincoln, Nebraska Cattlemen, and Nebraska Pork Producers Association in 2004 and 2005. This method was highly successful in providing quality state-wide and national educational resources, resulting in substantial advances in producer and insurance agent understanding of LRP and use of LRP for hedging price risk. The distance education program for LGM was merged with UNL´s LRP Insurance website to create one comprehensive Livestock Insurance Website (http://livestockinsurance.unl.edu).
Project goals were to reach 25 insurance agents who were licensed to sell LGM insurance (approximately 290 were reached). By educating key agents, educational efforts were strongly leveraged by them providing quality information to producers. National audience of livestock producers, insurance agents, and educators now have access to distance education self-study materials on the Internet. This educational program is self-sustaining through the development of the distance education materials.
Number of Participants: 3314
PROMOTIONAL MATERIALS
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EDUCATIONAL MATERIALS
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REPORTS & EVALUATIONS
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