LGM-Dairy Blog Update
It has been awhile since I last wrote, but I thought I would write an update with our latest.
I think since I last wrote, LGM-Dairy has picked up a lot of interest and awareness. I know it was a topic of conversation with my husband’s family at Thanksgiving. His cousin was thinking of signing up for it and found out that there was only two contracts in the whole state that had been signed up till then – you guessed it, ours!
We shared our strategy with him – basically to maintain some sort of coverage at all times, or for however long we can. But really, we’re just testing it all out! We are using the default feed rations and trying out 100 cwts per month of coverage.
We should find out what happens for the December actual margin in the next few days. We first signed up in October, so December is our first month of coverage.
We also signed up in November for January margin coverage. We did the same thing that we did the previous month. However, we did change things up for the December sign-ups. A bunch of changes have been made and put into place for the program starting with applications completed in December.
- You no longer pay the premium up front, but rather at the end of the premium. Boy, does that take a hurdle out of signing up! For our low level of coverage- 100 cwts - the premium was not too bad for one month. But if we wanted to consider signing up more than one month, ten for example, that means we would have had to pay ten times what we were!
- There is a subsidy to go against the premium now, but you have to sign up for a minimum of two months. So, we signed up 100 cwts for two months – February and March. In the future I think we may look to sign up for more consecutive months.
- There are also deductibles that you can take off the top to help with your premium if you are signing up a lot of margin coverage. With our 25 cows, 100 cwts actually ends up being 22% of our total monthly milk production. We may look to increase that somehow – whether its overlap coverage so at any given time 44% of our margin and/or to simply increase the cwts of coverage.>
I’m excited that the program is catching on. No doubt volatility is here to stay – even if we do reform milk pricing in the U.S. A paper that was put out by Mark Stephensen and Chuck Nicholson that analyzed the different policy proposals showed different levels of impact on a future projected price. One thing was true of all the proposals, however, while volatility may have been lessened, it was not eliminated.
There are tools out there already existing like LGM-Dairy and there are more to be created I’m sure to help alleviate this risk. I don’t want to wait for reform that may or may not happen. We’re taking whatever steps right now to try to manage the swings better. Someone once said, “If it is to be, it is up to me.”
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Many thanks to our anonymous farmer for sharing this experience with us!
See also:
Testing LGM-Dairy (the first report in this series)
LGM-Dairy Calculations (online LGM Analyzer)
Anyone with questions may post a comment on any of these blog posts. You may also directly e-mail our insurance agent Shantel Thomas or me.
UPDATE 1/03/11: Shantel had a baby boy this morning! Both mother and son are doing well. Until Shantel returns from maternity leave, Yankee's contact for crop insurance and LGM-Dairy insurance is Jeremy Forrett of Crop Growers. Anyone with questions can e-mail Jeremy or me.
