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Subsidy Capture in Livestock Risk Protection Insurance: Assessing Prevalence and Program Exposure

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  • Ryan Feuz

Abstract

This study evaluates the potential for subsidy capture within the USDA's Livestock Risk Protection (LRP) insurance program. We show that contracts with expiration dates aligning with CME option expiration dates are purchased at elevated rates, particularly in feeder cattle and swine. The scale and timing of these purchases are consistent with subsidy capturing trading behavior. In contrast, we find no significant evidence of subsidy capture in fed cattle. Estimated maximum subsidy captures for 2024 reach $10 million in feeder cattle and $29.3 million in swine. Policy reforms targeting contract timing and pricing mechanisms are recommended to protect program integrity.JEL Classification: Q18, Q10, Q19

Suggested Citation

  • Ryan Feuz, 2026. "Subsidy Capture in Livestock Risk Protection Insurance: Assessing Prevalence and Program Exposure," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 48(2), pages 505-517, May.
    • Handle: RePEc:wly:apecpp:v:48:y:2026:i:2:p:505-517
    DOI: 10.1002/aepp.70046
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    References listed on IDEAS

    as
    1. Boyer, Christopher N. & Griffith, Andrew P., 2023. "Subsidy Rate Changes on Livestock Risk Protection for Feeder Cattle," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 48(01), January.
    2. Merritt, Meagan G. & Griffith, Andrew P. & Boyer, Christopher N. & Lewis, Karen E., 2017. "Probability Of Receiving An Indemnity Payment From Feeder Cattle Livestock Risk Protection Insurance," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 49(3), pages 363-381, August.
    3. Belasco, Eric J. & Schroeder, Ted C. & Goodwin, Barry K., 2010. "Quality Risk and Profitability in Cattle Production: A Multivariate Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(3), pages 1-21, December.
    4. Belasco, Eric J. & Taylor, Mykel R. & Goodwin, Barry K. & Schroeder, Ted C., 2009. "Probabilistic Models of Yield, Price, and Revenue Risks for Fed Cattle Production," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 41(1), pages 91-105, April.
    5. Feuz, Dillon M., 2009. "A Comparison of the Effectiveness of Using Futures, Options, LRP Insurance, or AGR-Lite Insurance to Manage Risk for Cow-calf Producers," 2009 Conference, April 20-21, 2009, St. Louis, Missouri 53046, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    6. Haviland, Logan B. & Feuz, Ryan, 2022. "Livestock Risk Protection: Selecting Optimal Coverage Contracts for Producers," Western Economics Forum, Western Agricultural Economics Association, vol. 20(2), December.
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    More about this item

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q19 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Other

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