Imagine this: You get a call today from your video sale rep, and they say, “We can offer you $275.93 per hundredweight (steers and heifers) for your 2025 calf crop.”
Would you take it?
Back of the napkin math gets you to about $1,650 an animal, regardless of steer or heifer. That’s not too shabby, you might think. And the next thought that comes to your mind is the question back to your rep, “Well, what’s the catch?”
Their response, “The catch is that you have to pay about $62 per head after they’re sold, in order to guarantee that price, right now, for your calves in summer 2025, delivered in the fall like normal.”
That cost takes you down just south of $1,600 per calf and it still doesn’t sound too bad. But the next caution comes right on the heels of that nice safe feeling, “But, hey, what if the market goes up? I don’t want to cheat myself by locking something in this early.”
As if the rep reads your mind, the reply comes, “You’re not locking in a final price, by the way. Just a minimum price. We’ll still honor any higher price, if the market is above this offer.”
At this point, it’s starting to sound like snake oil. Too good for that to really be true. No video sale or order buyer in their right mind would take your risk that strong and long.
And that is accurate. But LRP would. Because that’s what it’s made for.
That’s right, through Livestock Risk Protection (LRP) you can secure a minimum price for your 2025 calf crop and still sell higher if the market should end up that way when your calves go up for bid.
And here’s the thing. You can do it right now. An offer like this one is available to all cattle owners today. All you need is an open LRP policy, which is like opening an account. It’s not a transaction, or coverage, it just gives you the ability to purchase coverage. Doesn’t cost you a dime.
Then you look at the LRP quotes offered. You can select a coverage, sign the dotted line and lay the price risk off on your calves … before they’re even born. On top of that, you don’t pay anything till after your coverage expires.
There are many out there who consider this too good to be true. Out of 85.2 million head of cattle eligible, only 3.5 million have active LRP at the time of writing this article. Also, at the time of writing, cattle owners could secure $1,590 per calf, and that is after subtracting the cost to secure it. But only 4% of the industry has done it.
Something the industry has adopted at a much higher rate are value-add programs. You see them posted up like badges on the video lots. Using LRP on your cattle might be one of the greatest returns on investment of any value-add program out there.
The value-add comes in terms of value security. And it’s real, and it works. Do some homework, and at bare minimum write down the LRP price being offered to you today. Then every time you make a cost decision about inputs, other value-adds, etc., on your calves this year – just think about that price and if you had already secured it. Some of you have, and hat’s off to you. Enjoy your sleep while the market pulls the rest of our cowboy hearts in and out of anxiety over the next 10 months.
Note: Numbers used as example are current as of July 16, 2024.
