Wisconsin and Minnesota buy the most insurance policies.
The $2.5 million in funding for USDA’s Livestock Gross Margin for Dairy program (LGM-Dairy) was gone in 30 minutes during the Aug. 31, 2012 offering, according to Ron Mortensen of Dairy Gross Margin, LLC.
Mortensen reports that 156 policies were sold in 24 states. California, Minnesota and Wisconsin producers covered the most hundredweights. The most polices were written in Wisconsin, with 57, followed by Minnesota with 33.
The average policy had a premium of $24,382 or $.58 per cwt., Mortensen adds.
“That implies the average deductible was $.90 per cwt.,” he says. “The average hundredweight covered across the U.S. was 42,223. Average policy size was 31,600 cwt. in Wisconsin, 34,363 cwt. in Minnesota and 107,694 cwt. in California.
LGM-Dairy next will be available on Oct. 26, 2012, when the new government fiscal year adds money to the subsidy program, reports Mortensen.
“For the future, the U.S. House of Representatives has proposed raising the livestock risk management subsidy funding from $20 million to $50 million per year,” he says.
LGM-Dairy is a risk management tool that allows producers to protect against falling milk prices and rising feed costs. It is margin insurance, backed by the federal government, and is similar to crop insurance. USDA’s Risk Management Agency oversees the program.