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LRP: Risk Management Strategies for Video Sale Marketing

While the strategy of marketing cattle has changed, Livestock Risk Protection (LRP) can still provide price security where you need it. Video Sales have altered the way we buy and sell cattle and many producers find their greatest risk falls between calving and the time they sell. LRP can fill in the gap with price protection prior to the video sale.

Policy Rules: The requirement of the LRP policy is proof of ownership of the cattle at least 60 days prior to the coverage end date. For video sales, as long as the producer has possession of the insured cattle up to the 60-day mark, the cattle can be sold prior to the 60^th day. For example, cattle insured under LRP with an end date of October 15^th, could not be delivered any earlier than August 15^th. However, they could be sold prior to that date. When providing proof of sale, we would need the documentation to show:

• The insured as the seller
• The buyer
• The date the cattle were sold
• Type of cattle
• Expected weight
• Number of head
• Estimated date of delivery (preferred not required)

Below are two LRP scenarios based on protection prior to video sales:

Example 1: Goal to put coverage in July to put floor on video sale

1. Cattle would be delivered October 15^th but sold in July on video sale.
2. Place LRP coverage for July end date in order to align with video sale.
3. Provide proof of sale documents in the event of a loss.

Price risk is in July and LRP coverage aligns with that timeframe.

Example 2: Coverage to protect risk at delivery

1. Cattle will be delivered November 8^th but sold in July on video sale.
2. Place LRP coverage in November to align with delivery.
3. Provide proof of sale documents in the event of a loss.

Coverage aligns with risk at delivery. The cattle were sold outside of the 60-day requirement, however the insured had possession of the cattle within the 60-day window.

Talk to an AgRisk Advisor today about how Livestock Risk Protection can better align with your marketing plans going into this video sale season.

 

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