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Probability of Receiving an Indemnity Payment from Feeder Cattle Livestock Risk Protection Insurance

Author

Listed:
  • Merritt, Meagan
  • Griffith, Andrew P.
  • Boyer, Christopher N.
  • Lewis, Karen E.

Abstract

Livestock risk protection (LRP) insurance is a price risk management tool available to cattle producers; however, producers have been hesitant to adopt LRP. The objective of the study was to determine the monthly feeder cattle LRP contract coverage level and length maximizing the probability of the LRP net price being greater than the CME Feeder Cattle Index (CME FCI) price. The CME FCI prices were higher than the LRP net price for the majority of the contract lengths and coverage levels. Several coverage lengths and levels provided similar price protection, and there was no consistent preferred coverage length and level.

Suggested Citation

  • Merritt, Meagan & Griffith, Andrew P. & Boyer, Christopher N. & Lewis, Karen E., 2017. "Probability of Receiving an Indemnity Payment from Feeder Cattle Livestock Risk Protection Insurance," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 49(3), February.
    • Handle: RePEc:ags:joaaec:352113
    DOI: 10.22004/ag.econ.352113
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