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Jay Parsons explains how Livestock Risk Protection insurance works for feeder cattle producers and how to think about whether it fits your risk management plan. Find this episode on your favorite platform here.
This article was first published in the Department of Agricultural Economics "Cornhusker Economics" series on July 15, 2026.
Livestock Risk Protection (LRP) insurance became available for cattle producers in 2003. In 2018, several enhancements and improvements began to take place that resulted in lower costs, increased access, and ease of use for producers using LRP. For example, premium subsidies increased from a flat 13% to the current range of 35% to 55% with new and beginning producers receiving an additional 10% to 15% subsidy on top of those rates. The due date for premiums was also moved from the beginning of the insurance period to the end of the insurance period, making it easier for producers to initiate insurance coverage. These, along with other changes, led to a dramatic increase in the use of LRP.
Table 1 contains producer participation data in Nebraska for the LRP-Feeder Cattle insurance program from 2015 to 2025. LRP-Feeder Cattle insurance is available in five different forms for beef cattle: Steers Weight 1 (< 600 pounds); Heifers Weight 1 (< 600 pounds); Steers Weight 2 (600-1000 pounds); Heifers Weight 2 (600-1000 pounds); Unborn Bulls & Heifers Weight 1 (< 600 pounds); Unborn Bulls & Heifers Weight 2 (600-900 pounds); and, Unborn Calves (60-99 lbs. sold within two weeks after birth). The latter version of it was created to provide coverage of beef-on-dairy day-old calves. LRP-Feeder Cattle insurance is also available for Brahman and dairy cattle in the Weight 1 and Weight 2 classes.
Table 1 shows the dramatic increase in sales and volume of cattle covered by LRP-Feeder Cattle insurance in Nebraska starting in 2021. The number of feeder cattle insured annually in Nebraska has increased from the tens of thousands to over half a million head in recent years. Producer loss ratios (returns per dollar of producer premium after subsidy) remain variable depending on market outcomes versus expectations. However, from 2015-2024, 64% of LRP-Feeder Cattle policies earning premiums in Nebraska paid out some level of indemnity. The producer loss ratio averaged 1.15 (indemnities exceeded producer premiums by 15%) over that period.
Table 1a. LRP-Feeder Cattle Summary of Business for Nebraska
Livestock Risk Protection Feeder Cattle Insurance (LRP-Feeder Cattle) Usage in Nebraska 2015-2025.
| Year | Policies Sold | Policies Earning Prem | Quantity (Head) | Liabilities ($) | Total Prem ($) | Policies Indemnified |
|---|---|---|---|---|---|---|
| 2015 | 1,457 | 141 | 15,456 | $23,890,729 | $616,680 | 69 |
| 2016 | 1,402 | 75 | 9,885 | $10,773,447 | $460,552 | 67 |
| 2017 | 1,552 | 191 | 21,735 | $20,816,435 | $995,861 | 50 |
| 2018 | 1,224 | 117 | 15,802 | $16,967,064 | $640,475 | 45 |
| 2019 | 1,238 | 69 | 8,958 | $10,390,904 | $309,240 | 47 |
| 2020 | 1,237 | 46 | 7,231 | $8,403,175 | $324,531 | 18 |
| 2021 | 1,721 | 291 | 61,698 | $74,252,751 | $3,126,675 | 211 |
| 2022 | 2,595 | 599 | 199,083 | $273,807,929 | $11,230,777 | 473 |
| 2023 | 2,275 | 1,376 | 487,410 | $848,243,077 | $32,544,716 | 600 |
| 2024 | 3,377 | 1,725 | 527,431 | $1,118,980,976 | $51,904,234 | 1,364 |
| 2025 | 4,621 | 2,619 | 765,306 | $1,702,594,318 | $76,248,014 | 66 |
| AVERAGE | 1,808 | 463 | 135,469 | $240,652,649 | $10,215,374 | 294 |
Table 1b. LRP-Feeder Cattle Summary of Business for Nebraska (continued)
Livestock Risk Protection Feeder Cattle Insurance (LRP-Feeder Cattle) Usage in Nebraska 2015-2025.
| Year | Indemnity ($) | Loss Ratio | Subsidy ($) | Subsidy (%) | Producer Prem ($) | Producer Loss Ratio |
|---|---|---|---|---|---|---|
| 2015 | $872,264 | 1.41 | $80,165 | 13% | $536,515 | 1.63 |
| 2016 | $625,482 | 1.36 | $60,411 | 13% | $400,141 | 1.56 |
| 2017 | $195,421 | 0.20 | $128,310 | 13% | $867,551 | 0.23 |
| 2018 | $406,191 | 0.63 | $82,998 | 13% | $557,477 | 0.73 |
| 2019 | $584,929 | 1.89 | $40,691 | 13% | $268,549 | 2.18 |
| 2020 | $224,896 | 0.69 | $70,725 | 22% | $253,806 | 0.89 |
| 2021 | $1,186,861 | 0.38 | $1,105,096 | 35% | $2,021,579 | 0.59 |
| 2022 | $11,181,705 | 1.00 | $3,953,344 | 35% | $7,277,433 | 1.54 |
| 2023 | $12,121,426 | 0.37 | $11,422,399 | 35% | $21,122,317 | 0.57 |
| 2024 | $49,709,981 | 0.96 | $18,247,496 | 35% | $33,656,738 | 1.48 |
| 2025 | $628,037 | 0.01 | $26,669,356 | 35% | $49,578,658 | 0.01 |
| AVERAGE | $7,710,916 | 0.75 | $3,519,164 | 34% | $6,696,211 | 1.15 |
*2025 is still in progress and not included in the averages.
Source: https://www.rma.usda.gov/en/Information-Tools/Summary-of-Business, June 30, 2026.
I have tracked LRP-Feeder Cattle insurance for a 13-week policy purchased in early August with an expiration date the first week in November since 2005 (Chart 1). Over those 21 years, LRP had a net positive effect (producer premium < indemnity) ten times. Circled in black in Chart 1, these occasions were 2006-2009, 2015-2016, and 2020-2023. LRP has the effect of evening out the valleys of unexpected price changes. For example, in 2008, the actual ending value in November was $21.51 per cwt., below the expected ending value that was projected back in August. This resulted in an indemnity of $20.81 per cwt., minus the producer premium of $4.06; the purchase of LRP insurance added $16.75 per cwt. to the bottom line. Similarly, in 2015 and 2016, the last time we emerged from drought with recovering cattle inventories, LRP insurance added over $9 per cwt. to the bottom line in consecutive years. From the producer’s perspective, losses under LRP insurance are capped at the premium cost, whereas gains are variable and potentially much larger. As a result, despite seemingly equal chances for gain or loss, the producer loss ratio averaged 1.40 over the 21 years depicted in Chart 1.
Figure 1. LRP-Feeder Cattle insurance performance for Steers Weight 2 with purchase date August 6-8 and expiration date November 5-7 relative to the expected ending value insured at the highest level.
Like most insurance products, LRP is not something producers should purchase expecting to receive a payout. Instead, it is most effective when incorporated into a broader market risk management strategy, helping protect profits during years when cattle markets decline.
LRP continues to evolve, with ongoing changes designed to increase its value and accessibility for cattle producers. One of the most recent enhancements affects premium subsidies for new and beginning producers, bringing the program into alignment with provisions in the One Big Beautiful Bill Act (OBBB) of 2025.
For all producers, LRP subsidy rates range from 35% to 55%, depending on the selected coverage level (Table 2). Historically, new and beginning producers have received an additional 10-percentage-point subsidy above the standard schedule. Under the OBBB changes, premium assistance is increased further during the producer’s first four years of operation. New and beginning producers now receive an additional five percentage points in years one and two, three percentage points in year three, and one percentage point in year four.
As a result, beginning producers in their first two years of operation can receive a total premium subsidy of 50% even at the highest LRP coverage level, making the program more affordable for beginning producers while strengthening its role as a risk management tool.
Table 2. Standard LRP Insurance Premium Subsidy Levels
Coverage Level | Subsidy |
> 95% | 35% |
90-95% | 40% |
85-90% | 45% |
80-85% | 50% |
70-80% | 55% |
LRP insurance remains an important tool for cattle producers seeking to manage market price risk. While it is not intended to generate large profits through indemnity payments, it can help preserve profitability when cattle prices decline unexpectedly. The program’s simplicity, combined with government-supported premium subsidies, makes it an attractive option for producers looking to strengthen their overall risk management plans.
As cattle markets continue to experience periods of volatility, producers should evaluate how LRP fits within their marketing and risk management strategies. When used consistently and in combination with other management tools, LRP can provide valuable downside price protection and contribute to the long-term financial resilience of cattle operations.
This work is supported by the North Central Extension Risk Management Education Center, project award no. 2025-70027-45398, from the U.S. Department of Agriculture’s National Institute of Food and Agriculture.
