USDA's Livestock Gross Margin Insurance for Dairy: What Is It and How Can It Be Used for Risk Management

Abstract

Dairy farmers are faced with tremendous and increasing volatility, both in terms of milk prices, and the costs of purchased feed. There is a new weapon in the risk management arsenal of U.S. dairy producers: the Livestock Gross Margin for Dairy (LGM-Dairy) insurance program controls for lower gross revenue, defined as the value of milk produced minus feed costs. This program is administered by USDA's Risk Management Agency, and made available via authorized crop insurance agents to dairy farm operators in the lower 48 states.