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Idaho and Oregon Dairy Producers Now Have Additional Risk Management Choices

The U.S. Department of Agriculture’s Risk Management Agency (RMA) recently announced that the Federal Crop Insurance Corporation’s (FCIC) Board of Directors approved the expansion of the Livestock Gross Margin Dairy Cattle (LGM-Dairy) insurance plan into Idaho and Oregon for the 2011 crop year.

Idaho and Oregon Dairy Producers Now Have Additional Risk Management Choices

SPOKANE, WASHINGTON, June 21, 2010 -- The USDA’s Risk Management Agency (RMA) recently announced that the Federal Crop Insurance Corporation’s (FCIC) Board of Directors approved the expansion of the Livestock Gross Margin Dairy Cattle (LGM-Dairy) insurance plan into Idaho and Oregon for the 2011 crop year. The program is currently available in Washington. The expansion was requested by Iowa Agricultural Innovations, Inc. the owners of the LGM insurance products.

LGM-Dairy provides protection against loss of gross margin (market value of milk minus feed costs) on milk produced from dairy cows. LGM-Dairy uses the Chicago Mercantile Exchange group futures prices for class III milk and Chicago Board of Trade future prices for corn and soybean meal to determine the expected gross margin and the actual gross margin.

LGM-Dairy provides convenience as producers can sign up for LGM-Dairy 12 times per year and insure all milk production they expect to market over a rolling 11-month insurance period. It is a customized product and can be tailored to any size farm. It is considered a bundled option insurance, similar to buying both a call option to limit higher feed costs and a put option to set a floor on milk prices.

The premium payment is due when coverage begins. LGM-Dairy premiums depend on a producer’s marketing plan, the coverage selected, deductible level, and futures and price volatility.

Sales for the 2011 crop year will begin July 30, 2010 (the last Friday of the month) and continue through June 30, 2011 (or until the maximum underwriting capacity [as established by the FCIC] is reached). Dairy producers are encouraged to contact a local livestock insurance agent for more details.

For more information about the Livestock Gross Margin insurance policy for dairy cattle, see the RMA Web site at: http://www.rma.usda.gov.

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