Catttle Market Protections

Between high prices, historically low cattle herd inventory, the threat of the New World, screwworm, and other geopolitical pressures, the cattle industry is facing a perfect storm of volatility. University of Illinois Assistant Professor of Agriculture and Consumer Economics, Brittany Goodrich shares insight on how producers can protect themselves in today's market.

“One is really relevant to price risk in general. It's called livestock risk protection, and it's essentially a subsidized option, so it works directly off of futures markets, and it's really good for small producers who can't really afford to take part in futures markets because the contracts are just so big. This USDA program actually allows you to protect against that downward price risk in a subsidized way, and you can insure as few as one head of cattle if you would like another one to help on kind of the input and drought side is the pasture, rangeland, and forage rainfall index insurance program. This protects against lower than average rainfall, so pays an indemnity when you have these drought-like conditions.”

Goodrich says these two tools can help producers protect themselves, noting that even with strong prices, the market can still see rapid volatility, especially with the cattle herd at historically low levels. I'm Lorrie Boyer with today's Line on Agriculture Report.