As milk markets remain unpredictable and cull cow prices fluctuate, new tools are emerging to help dairy farmers manage financial risk. The USDA’s June Livestock, Dairy and Poultry Outlook reports that livestock markets—especially beef—are reaching record highs, creating both opportunity and vulnerability for producers. In response, the Livestock Risk Protection (LRP) insurance program is introducing expanded coverage options, including one tailored specifically for dairy cull cows and another for unborn beef-on-dairy calves.
The timing is strategic. High cattle prices mean any downturn could result in significant losses, especially for producers marketing animals into the beef system. LRP coverage helps set a price floor for future sales, offering protection if markets fall while still allowing participation in price gains.
Coverage for Cull Dairy Cows
A newly introduced LRP endorsement offers dairy producers the ability to lock in prices for cull cows being marketed for slaughter. The option targets animals in the 800- to 1,500-pound range, including Jerseys. Coverage spans 13 weeks and is based on the Feeder Cattle Index, adjusted to reflect seasonal trends and the price differential between cull cows and feeder cattle. In the event of a claim, producers must provide sales records.
This type of targeted protection may be particularly beneficial as cull cow sales often represent a significant portion of revenue for dairy farms, especially during herd transitions or health-related downsizing.
Protection for Beef-on-Dairy Calves
A second LRP update focuses on unborn calves resulting from beef-on-dairy crossbreeding—such as Holsteins bred to Angus bulls—and full-beef calves sold shortly after birth. These crossbred calves continue to gain market value and are an important revenue stream for many dairy farms.
The policy is designed for calves between 60 and 99 pounds and settles against the CME Feeder Cattle Index using a dynamic price adjustment factor that reflects real-time market conditions. While individual calf weights aren’t required for claims, producers must submit sales records to receive indemnities.
Customizable Protection for Diverse Operations
Beyond the new dairy-targeted endorsements, LRP continues to offer customizable options for feeder and fed cattle. These policies provide flexibility in coverage length and herd size, making them accessible to both large and small operations. With coverage periods ranging from 13 to 52 weeks, dairy farmers with beef ventures or custom calf-raising programs can tailor plans to suit their marketing windows.
As LRP continues to evolve, it is becoming an increasingly valuable tool for dairy producers navigating both milk and cattle markets.
