United States 

Department of 

Agriculture Livestock Gross Margin 

Insurance Plan for Swine 

June 2012 

Livestock Gross Margin insurance plan for Swine 

(LGM-Swine) provides protection against the loss of 

gross margin (market value of livestock minus feed 

costs) on swine. LGM-Swine uses futures prices to 

determine the expected gross margin and the actual 

gross margin. The price you receive at the local market 

is not used in these calculations, and the policy does 

not insure against death loss or any other loss or 

damage to your swine. 

Availability 

LGM-Swine is available in the 48 contiguous States to 

all swine producers. 

 

Covered Operations

Farrow-to-Finish Operation - A type of farm 

operation that covers all aspects of breeding, 

farrowing, and raising swine to slaughter. 

Feeder Pig-Finishing Operation - A type of farm 

operation that specializes in the feeding of swine 

(feeder pigs) from a weight of about 50 pounds to 

slaughter.

 Segregated Early Weaned (SEW) Operation - A 

type of farm operation that specializes in the feeding of 

swine (SEW pigs) from the age of about 12 - 21 days 

to slaughter. 

Buying a Policy 

You can insure the swine you expect to market 12 

times each year. Each insurance period is 6 months 

long and overlaps other insurance periods. Coverage 

begins 1 month after you buy a policy so coverage is 

available only for the last 5 months of the period. The 

insurance policy is continuous and renews 

automatically. 

LGM-Swine insurance is sold on the last business 

Friday of each month. Sales begin as soon as the 

Unites States Department of Agriculture reviews the 

data submitted by the developer after the close of 

markets on the last day of the price discovery period. 

Sales end at 8:00 p.m. Central Standard Time the 

following evening (Saturday). Your premium payment 

is due at the end of the 6-month insurance period. If 

the expected gross margins are not available on the 

RMA Web site, LGM-Swine will not be offered for 

sale during that insurance period. 

All multi-peril crop insurance policies are 

available from private insurance agents. A list of 

livestock insurance agents is on the RMA Web 

site at: http://www3.rma.usda.gov/tools/agents/ or 

at your local USDA Service Center. 

Deductible 

You can select insurance deductibles between 

$0 and $20 per head in $2 increments. 

Indemnity Payments 

The indemnity at the end of the 6-month insurance 

period is the difference, if positive, between the gross 

margin guarantee and the actual gross margin. If the 

actual gross margin is less than the expected 

gross margin (minus the deductible) for the insurance 

period, an indemnity may be payable. Indemnities 

equal the difference between the gross margin 

guarantee and the actual total gross margin (See 

example on page 2). 

Actual gross margin per swine is determined 

differently for different operation types. Combination 

types on the same policy have separate guarantees and 

loss payments. 

Farrow-to-Finish Operations: The actual swine 

price for the month swine are marketed times 0.74, 

times the assumed weight of the swine at marketing 

(260 pounds, or as stated in the Special Provisions), 

minus the actual cost of feed 3 months before the 

swine are marketed (using Chicago Mercantile 

Exchange prices). 

Feeder and SEW Pig Finishing Operations: The 

actual swine price for the month swine are marketed 

times 0.74, times the assumed weight of the swine at 

marketing (260 pounds, or as stated in the Special 

Provisions) minus the actual cost of feed 2 months 

This fact sheet gives only a general overview of the Federal Crop Insurance Program and is not a complete policy. For further information and 

an evaluation of your risk management needs, contact a crop insurance agent. 
before the swine are marketed (using Chicago 

Mercantile Exchange prices). 

Definitions

 Actual Gross Margin: Based on the market valu

of the swine minus feed costs using Chicago 

Mercantile Exchange Actual Prices.

 Actual Total Gross Margin: The actual total 

gross margin is the sum of the target marketings 

times the actual gross margin per head of swine for

each month of an insurance period. 

 Expected Gross Margin: Based on the market 

value of the swine minus feed costs (corn and 

soybean meal equivalents) using Chicago 

Mercantile Exchange futures prices.

 Feed Equations: The feed equations for LGMSwine are based on an optimal feeding ration 

developed through Iowa State University. 

 Insurance Period: Coverage begins on the swine 

1 full calendar month following the sales closing 

date, unless otherwise specified in the Special 

Provisions. For example, the insurance period for 

the January sales closing date includes the months 

of February (swine not insurable), March, April, 

May, June, and July. 

 Target Marketings: Your target marketings are a 

determination you make about the maximum 

number of slaughter-ready swine that you will 

market (sell) during the insurance period. The target 

marketings must be less than or equal to the 

applicable approved target marketings you certified 

when buying insurance coverage. 

Yield Factor: The yield factor converts lean hog 

prices to live hog prices. The yield factor is set at 

0.74 for LGM-Swine. 

For More Information 

LGM Coverage Prices, Rates, and Actual Ending 

Values: 

http://www3.rma.usda.gov/apps/livestock_reports/ 

Cost Estimator (Premium Calculator): 

http://ewebapp.rma.usda.gov/apps/costestimator/ 

e Example

Assume you have a farrow-to-finish operation and 

sold 10 head of swine in June for $30, feed in March 

cost $20 a head, the expected gross margin is $470, 

and you chose a deductible of $2 a head. Your 

deductible is $20. You would subtract the deductible 

from the expected gross margin ($470 - $20 = 

$450). Your actual gross margin is $377.20 [($30 x 

0.74 x 2.6) - $20 (feed price) = $37.72 x 10 head]. 

Your indemnity payment would be $72.80 ($450 -

$377.20). 

Contact Us 

USDA/Risk Management Agency 

Mail Stop 0801 

1400 Independence Ave., SW 

Washington, DC 20250-0801 

http://www.rma.usda.gov 

rma.cco@rma.usda.gov 

Download Copies from the Web 

Visit our online publications/fact sheets page at: 

http://www.rma.usda.gov/pubs/rme/fctsht.html 

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TDD). 

To file a complaint of discrimination write to: USDA, Director, 

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provider and employer. 

Program Aid 2106