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PROBABILITY OF RECEIVING AN INDEMNITY PAYMENT FROM FEEDER CATTLE LIVESTOCK RISK PROTECTION INSURANCE

  • MEAGAN G. MERRITT (a1), ANDREW P. GRIFFITH (a1), CHRISTOPHER N. BOYER (a1) and KAREN E. LEWIS (a1)
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.

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Copyright
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
Corresponding author
*Corresponding author's e-mail: agriff14@utk.edu
Footnotes
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The authors would like to thank the U.S. Department of Agriculture, Research Management Agency and specifically Lan Pham for assisting with livestock risk protection data collection. The authors would also like to thank the reviewers of this article for their thoughtful input and suggestions, which resulted in a more complete product.

Footnotes
References
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Journal of Agricultural and Applied Economics
  • ISSN: 1074-0708
  • EISSN: 2056-7405
  • URL: /core/journals/journal-of-agricultural-and-applied-economics
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