Livestock Gross Margin (LGM – Dairy)

Running a dairy farm is often a financial balancing act. With volatile commodity markets affecting both milk prices and feed costs, dairy producers are faced with a difficult challenge when it comes to securing their future profitability. The Livestock Gross Margin (LGM) – Dairy program offers protection against gross margin losses resulting from increases in feed costs and/or declines in milk price. LGM - Dairy utilizes futures prices to calculate the expected gross margin.

How is Gross Margin


Milk Price – Feed Cost = Gross Margin

Milk Price: based on Class III futures settlements

Feed Cost: based on Corn & Soybean Meal futures settlements

How Can I Buy LGM – Dairy?

To purchase LGM - Dairy, you must set up a policy. The process is quick and easy and requires minimal paperwork

The 4 LGM – Dairy Coverage Decisions

1. Coverage Period

Monthly, available up to 11 months into the future

2. Declared Milk Production

The amount of milk production for each month that you would like covered

3. Breakdown of Feed Rations

• Tons of corn (or corn equivalent)
• Tons of soybean meal (or soybean meal equivalent)

4. Deductible

Select a $/cwt deductible (ranges from $0 to $2 in $0.10 increments)

How Are Losses Calculated?

Guaranteed Gross Margin

(Expected Milk Price – Expected Feed Cost) - Deductible Amount = Guaranteed Gross Margin

Actual Gross Margin

Actual Milk Price – Actual Feed Cost = Actual Gross Margin

Loss Determination

Guaranteed Gross Margin > Actual Gross Margin = Loss
Guaranteed Gross Margin < Actual Gross Margin = No Loss

Loss Amount

Guaranteed Gross Margin – Actual Gross Margin = Loss Amount

Explore LGM-Dairy

Let’s talk through our protection options.

Schedule a free producer consultation to determine the best strategy for your dairy.