Payout Analysis of Livestock Risk Protection Insurance for Feeder Cattle

Kenneth Burdine and Greg Halich

Journal of the ASFMRA, 2014, vol. 2014, 14

Abstract: Monte-Carlo simulation was used to examine net payouts, defined as indemnities received minus premiums paid, to producers purchasing Livestock Risk Protection (LRP) Insurance for Feeder Cattle. Actual policies were utilized that included various purchase dates, coverage levels, and premiums from fall 2007 to spring 2013. Net payouts were estimated for time periods typical of both summer grazing and winter backgrounding at various expected price risk levels. Results suggest that expected net payouts generally became positive when producers perceived a 10 percent chance of a $15 per cwt price decrease. Results also suggested expected net payouts were higher for insurance purchased in the fall than in the spring.

Keywords: Financial Economics; Livestock Production/Industries (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jasfmr:197103

DOI: 10.22004/ag.econ.197103

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