Senior Farm and Ranch Broadcaster Ron Hays talks with Clay Burtrum of Farm Data Services in Stillwater about an important deadline coming up at the end of this month for LRP and Crop Insurance users.
This time of year is when cattlemen and women can change LRP or crop insurance agents. Burtrum elaborated, “We entered into the change date beginning on the first of June. They open the window for thirty days because, unfortunately, you can’t change agents midyear, and we don’t have a tool that tells us if you are with another agent or maybe you signed an application three years ago and never bought anything. We don’t have a way to make a change in the middle of the year.”
The window to change agents is open from June 1 – June 30, ahead of the July 1 crop year.
“We can facilitate that promptly and get that done,” Burtrum said of clients wishing to change to a Farm Data Services agent. “We started in the LRP business before we had any crop business, over 25 years ago when LRP was brand new. We are very experienced; we know a lot about LRP. From a personal perspective, I buy it and use it myself as well.”
The elevated prices of cattle have created an environment of high risk for cattle producers, which makes margin protection like livestock risk protection, or LRP, more important than ever before.
“With the sheer cost of what we are having to pay for these feeder cattle, today, this is a very useful tool that we can use to protect those cattle – when I say protect, I mean putting a floor under those cattle and leave your topside potential open,” Burtrum stated.
He compared LRP to keeping insurance each month on one’s house or car, all the while hoping not to have a wreck. Keeping LRP on cattle is much simpler, though. If cattle markets are higher when the calves are sold, the producer keeps his or her profit, and the premium isn’t due until after the contract period ends.
“One of the great things about this program, unlike hedging and using puts and options, is that you don’t have to have a full load to do this,” Burtrum shared. “If you’re buying 25 head today and then you go to the next sale barn and you buy 25 head or off of your neighbor or somebody else, you can insure those on the day you buy them and continue as you continue to put those cattle together.”
It is valuable to cow calf producers because even unborn calves can be insured to prepare for when they go to market. “It’s never too early to start thinking about wheat pasture; I people are just now shipping off many of those, but start thinking about those calves that you have on the ground and will be shipping in about twelve months. You need to think about getting some protection on those cattle.”
Burtrum described a new option based on a forward contract or purchase agreement. It would require copies of those things as well as proof of delivery, and Burtrum advised potential buyers to work with an experienced agent who is aware of some of the nuances to such coverage, where a producer can’t enter into another forward contract until those cattle are delivered.
“This is an option that we’ve been asking for,” he said. “Many of us see the different video options going on as we enter into late June and early July that won’t deliver until wheat pasture time in late fall next year, but you can get protection on those cattle, now.”
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR at the top of the story for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
