Pork producers face high financial risks from volatile markets. Those who want to manage their risks more efficiently might want to learn about two programs that can help establish a floor under hog prices.
Both currently are available through private insurance agents. Livestock Gross Margin (LGM) insurance and Livestock Risk Protection (LRP) insurance both offer several levels of minimum price guarantees based on lean hog, corn and soybean meal futures contracts.
Unlike futures contracts, though, these policies allow producers to insure any number of hogs for any marketing month. These insurance programs, originally available for a limited time beginning in late 2002, were reinstated effective Oct. 1, 2004.
A spreadsheet to help estimate the premiums for LGM is available on the Web site of the Center for Agricultural and Rural Development (CARD) at www.card.iastate.edu/ag_risk_tools/lgm/.
More information on both insurance programs is available in this online fact sheet www.extension.iastate.edu/Publications/FM1871.pdf.