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 Additional Policy Provisions: LRP Advantages & Disadvantages
Chapter two presents rules and policy provisions along with advantages and limitations LRP has relative to other hedging strategies. Because LRP operates much like a put option, some people may wonder why one would be more or less favorable than the other. This chapter provides some insight into this question.
Topics covered include:
- Specific perils protected by LRP insurance;
- Livestock ownership requirements of LRP;
- How LRP provides flexibility and guaranteed premium pricing to users;
- How to transfer coverage or assign an indemnity;
- Why offsetting transactions and lifting hedges are not allowed when using LRP;
- How LRP can reduce basis risk.
Important! USDA-RMA has revised the LRP policy. The 2008 LRP Policy Updates provides detailed information regarding LRP program changes for 2008.
- To view the printed course materials and slides, you will need the Adobe Acrobat Reader
- To view the videos, you will need the free RealPlayer software available from Real.com.
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