LIVESTOCK GROSS MARGIN FOR DAIRY CATTLE INSURANCE POLICY - USDA
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22-LGM Dairy Cattle
LIVESTOCK GROSS MARGIN FOR DAIRY CATTLE INSURANCE POLICY
Throughout the policy, “you” and “your” refer to the named insured shown on the summary of insurance and “we,” “us,”
and “our” refer to the insurance company providing insurance. Unless the context indicates otherwise, use of the plural
form of a word includes the singular and use of the singular form of the word includes the plural.
This policy is reinsured by the Federal Crop Insurance Corporation (FCIC) under the provisions of the Federal Crop
Insurance Act (FCIA) (7 U.S.C. 1501-1524)All provisions of the policy and rights and responsibilities of the parties are
specifically subject to the FCIA. The provisions of the policy may not be waived or varied in any way by any crop
insurance agent of the insurance company providing insurance. Neither we, our employees, contractors, FCIC, nor the
Risk Management Agency has the authority to revise, amend, or otherwise alter this policy. We will use FCIC procedures
(handbooks, manuals, memoranda and bulletins), published on RMA’s website www.rma.usda.gov or a successor
website, in the administration of this policy, including any loss or claim submitted under this policy. In the event the
insurance company providing insurance cannot pay your loss, FCIC will become your insurer and your claim will be
settled and paid by FCIC in accordance with the provisions of this policy. No state insurance guarantee fund will be
liable to pay your loss.
Agreement to Insure: In return for the payment of the premium, and subject to all the provisions of this policy, we agree
to provide the insurance as stated in this policy. If a conflict exists among the policy provisions, the order of priority is as
follows: (1) the Special Provisions; (2) the actuarial documents;(3) Commodity Exchange Endorsement for Dairy Cattle
and (4) these Basic Provisions, with (1) controlling (2), etc.
BASIC PROVISIONS
TERMS AND CONDITIONS
1. Definitions. Actual price measurement period - The last three
Act - The Federal Crop Insurance Act (7 U.S.C. 1501- trading days prior to the last trading day for the futures
1524). contract.
Actual corn price - For months in which a CME Group Actual soybean meal price - For months in which a
corn contract expires, the simple average of the daily CME Group soybean meal contract expires, the simple
settlement prices for the CME Group corn futures average of the daily settlement prices for the CME
contract for the month during the actual price Group soybean meal contract for the month during the
measurement period. For other months, the weighted actual price measurement period. For other months,
average of the immediately surrounding months’ the weighted average of actual soybean meal prices in
simple average of the daily settlement prices during the the immediately surrounding months. (See the
actual price measurement period. (See the Commodity Commodity Exchange Endorsement for more
Exchange Endorsement for more information.) information.)
Actual cost of feed - The actual cost of feed for each Actual total gross margin - The sum of actual gross
month equals the target corn (or corn equivalent) to be margins per month across all months of the insurance
fed times 2,000/56 (to convert tons to bushels) times period.
the actual corn price for that month, plus the target Actuarial documents - The information for the crop
protein meal (or protein meal equivalent) to be fed year which is available for public inspection in your
times the actual soybean meal price for that month. agent’s office and published on RMA’s website which
Actual gross margin per month - Actual revenue less shows available crop insurance policies, coverage
the actual cost of feed for the month. levels, information needed to determine amounts of
Actual marketings - The total amount of milk sold by insurance, prices, premium adjustment percentages,
you in each month of the insurance period and for practices, particular types of the insurable crop, and
which you have proof of sale. Actual marketings are other related information regarding crop insurance in
used to verify ownership of milk and determine the state.
approved target marketings. Application - The form required to be completed by
Actual milk price - The simple average of the daily you and accepted by us before insurance coverage will
settlement prices of the CME Group Class III milk commence.
futures contract for the month during the actual price Approved target marketings - The maximum target
measurement period. (See the Commodity Exchange marketings allowed for the designated months of the
Endorsement for more information.) applicable insurance period. The producer’s target
Actual milk revenue - The actual milk price for a marketings for any month may not be more than the
month times target marketings for the month. producer’s approved target marketings. Approved
target marketings will be based the farm capacity for
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the ten-month insurance period as determined by the defined in 7 CFR part 400, subpart U.
insurance underwriter. End of insurance period, date of - The date the
Assignment of indemnity - A transfer of policy rights, insurance provided by this policy ceases.
made on our form, and effective when approved in Expected corn price - For months in which a CME
writing by us in accordance with section 14. Group corn contract expires, the simple average of the
Beginning farmer or rancher - An individual who has settlement prices for the CME Group corn futures
not actively operated and managed a farm or ranch in contract for the month during the expected price
any state, with an insurable interest in a crop or measurement period. For other months, the weighted
livestock as an owner-operator, landlord, tenant, or average of the immediately surrounding months’ simple
sharecropper for more than five crop years, as average of the daily settlement prices during the
determined in accordance with FCIC procedures. Any expected price measurement period. (See the
crop year’s insurable interest may, at your election, be Commodity Exchange Endorsement for more
excluded if earned while under the age of 18, while in information.)
full-time military service of the United States, or while Expected cost of feed - The expected cost of feed for
in post-secondary education, in accordance with FCIC each month equals the target corn (or corn equivalent)
procedures. A person other than an individual may be to be fed times 2000/56 (to convert tons to bushels)
eligible for beginning farmer or rancher benefits if there times the expected corn price for that month, plus the
is at least one individual substantial beneficial interest target protein meal (or protein meal equivalent) to be
holder and all individual substantial beneficial interest fed times the expected soybean meal price for that
holders qualify as a beginning farmer or rancher. month.
Cancellation date - The calendar date specified in the Expected gross margin per month - Expected
actuarial documents on which coverage will revenue less the expected cost of feed for the month.
automatically renew unless canceled in writing by Expected milk price - The simple average of the daily
either you or us or terminated in accordance with the settlement prices of the CME Group Class III milk
policy terms. futures contract for the month during the expected price
CME Group - The Chicago Mercantile Exchange measurement period. (See the Commodity Exchange
Group. Endorsement for more information.)
Company - The insurance company reinsured by FCIC Expected milk revenue - The expected milk price for
that is identified on, and issuing, your summary of a month times target marketings for the month.
insurance. Expected price measurement period - For each
Commodity Exchange Endorsement for Dairy week in which sales occur, the three trading days prior
Cattle - An endorsement that contains the exchange to and including Thursday that is the beginning of the
prices that is used to set the expected and actual prices weekly sales period.
for Livestock Gross Margin (LGM) Dairy Cattle. Expected soybean meal price - For months in which
Consent - Approval in writing by us allowing you to a CME Group soybean meal contract expires, the
take a specific action. simple average of the daily settlement prices of the
Contract change date - The calendar date contained CME Group soybean meal futures contract for the
in the actuarial documents by which changes to the month during the expected price measurement period.
policy, if any, will be made available in accordance with For other months, the weighted average of the
section 21 of these Basic Provisions. immediately surrounding months’ simple average of
Corn equivalent - The amount of corn equivalent to the daily settlement prices during the expected price
the energy content of the dairy ration used by the measurement period. (See the Commodity Exchange
producer. Suggested conversion rates for dairy feeds Endorsement for more information.)
are given in the Commodity Exchange Endorsement. Expected total gross margin - The sum of expected
Coverage - The insurance provided by this policy, gross margins per month across all months of the
against insured loss of gross margin as shown on your insurance period.
summary of insurance. FCIC - The Federal Crop Insurance Corporation, a
Crop year - The twelve-month period, beginning July wholly owned government corporation and agency
1 and ending the following June 30, which is within USDA.
designated by the calendar year in which it ends. Gross margin guarantee - The gross margin
Date coverage begins - the calendar date the guarantee for an insurance period is the expected total
insurance provided by this policy begins. gross margin for an insurance period minus the
Days - Calendar days. deductible.
Deductible - The portion of the expected total gross Insurance period - The eleven-month period
margin that you elect not to insure. Per hundredweight designated in the summary of insurance to which this
deductible amounts range from zero to $2.00 per cwt in policy is applicable. See the Commodity Exchange
10 cent increments. The deductible equals the selected Endorsement for additional detail on insurance periods.
per hundredweight deductible times the sum of target Insured - The person as shown on the summary of
marketings across all months of the insurance period. insurance as the insured. This term does not extend to
Delinquent debt - Has the same meaning as the term any other person having a share or interest in the
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animals (for example, a partnership, landlord, or any Sales period - The period that begins on Thursday of
other person) unless also specifically indicated on the each week when the coverage prices and rates are
summary of insurance as the insured. posted on RMA’s website and ends at 9:00 AM Central
Liability - The maximum amount payable on an Time of the following calendar day. Sales will not be
Insurance Period under this policy. available for purchase if the Thursday of the sales
Limit movement - The maximum price change based period is a federal holiday. The calendar date for
on the CME group current daily price limit for Thursday of the sales period will be shown as the
commodity futures. effective date in the actuarial documents.
Limited resource farmer or rancher - Has the same Share - The lesser of your percentage interest in the
meaning as the term defined by USDA at insured milk as an owner at the time insurance
https://lrftool.sc.egov.usda.gov/LRP_Definition.aspx or attaches and at the time of sale. Persons who lease or
successor website. hold some other interest in the milk other than as an
Livestock acceptance system - A computer system owner are not considered to have a share in the milk.
that accepts livestock applications and endorsements. Special Provisions - The part of the policy that
Marketing report - A report submitted by you on our contains specific provisions of insurance for each
form showing for each month your actual marketings insured crop that may vary by geographic area.
for that month of milk insured under this policy. The Soybean meal equivalent - The amount of soybean
marketing report must be accompanied by copies of meal equivalent to the protein content of the dairy
sales receipts that provide records of the actual ration used by the producer. Suggested conversion
marketings shown on the marketing report. rates for dairy feeds are given in the Commodity
Milk - Milk produced from any species of domesticated Exchange Endorsement.
mammal of the family Bovidae commonly grown for Substantial beneficial interest - An interest held by
production of dairy products, also referred to as dairy any person of at least ten percent in you (e.g., there
cows. are two partnerships that each have a 50 percent
Notice of probable loss - Our notice to you of a interest in you and each partnership is made up of two
probable loss on your insured milk. individuals, each with a 50 percent share in the
Offset - The act of deducting one amount from another partnership. In this case, each individual would be
amount. considered to have a 25 percent interest in you, and
Person - An individual, partnership, association, both the partnerships and the individuals would have a
corporation, estate, trust, or other legal entity, and substantial beneficial interest in you. The spouses of
wherever applicable, a State or a political subdivision the individuals would not be considered to have a
or agency of a State. “Person” does not include the substantial beneficial interest unless the spouse was
United States Government or any agency thereof. one of the individuals that made up the partnership.
Policy - The agreement between you and us consisting However, if each partnership is made up of six
of these provisions, the Special Provisions, the individuals with equal interests, then each would only
summary of insurance, the Commodity Exchange have an 8.33 percent interest in you and although the
Endorsement, and the applicable regulations partnership would still have a substantial beneficial
published in 7 CFR chapter IV. interest in you, the individuals would not for the
Premium - The amount you owe us for this purposes of reporting in section 2). The spouse of any
insurance coverage based on your target individual applicant or individual insured will be
marketings in accordance with section 5. presumed to have a substantial beneficial interest in
Premium billing date - The earliest date upon which the applicant or insured unless the spouses can prove
you will be billed for insurance coverage based on your they are legally separated or otherwise legally
target marketing report. The premium billing date is the separate under the applicable State dissolution of
first business day of the month following the last month marriage laws. Any child of an individual applicant or
of the insurance period in which you have target individual insured will not be considered to have a
marketings. substantial beneficial interest in the applicant or
Producer premium - The total premium minus the insured unless the child has a separate legal interest
premium subsidy paid by FCIC. in such person.
RMA - Risk Management Agency, an agency within Summary of insurance - Our statement to you, based
USDA. upon your application, specifying the insured, the milk,
RMA’s Website - A website hosted by RMA and the target marketings, gross margin guarantee, and the
located at https://www.rma.usda.gov/ or a successor premium for an insurance period.
website. Target corn to be fed - Your determination as to the
Sales closing date - The last day of the sales period number of tons of corn or corn equivalent that you will
by which your completed application must be feed for each month.
received by us. Also, the last date by which you may Target protein meal to be fed - Your determination as
change your insurance coverage for an insurance to the number of tons of soybean meal or protein meal
period. equivalent you will feed each month.
Target marketings - Your determination as to the
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number of hundredweight of milk you elect to insure in or by us. In accordance with section 20, FCIC
each month during the insurance period. may change the coverage provided from year to
Target marketings report - A report submitted by you year.
on our form showing for each month your target (e) With respect to your application for insurance:
marketings for that month. (1) You must include your social security number
Termination date - The calendar date upon which (SSN) if you are an individual (if you are an
your insurance ceases to be in effect because of individual applicant operating as a business,
nonpayment of any amount due us under the you may provide an employer identification
policy, including premium. number (EIN) but you must also provide your
USDA - The United States Department of Agriculture. SSN); or
Veteran farmer or rancher - An individual who has (2) You must include your EIN if you are a person
served active duty in the United States Army, Navy, other than an individual;
Marine Corps, Air Force, or Coast Guard, including the (3) In addition to the requirements of section
reserve components; was discharged or released 2(e)(1) or (2), you must include the following
under conditions other than dishonorable; and: for all persons who have a substantial
(1) Has not operated a farm or ranch; beneficial interest in you:
(2) Has operated a farm or ranch for not more than 5 (i) The SSN for individuals; or
years; or (ii) The EIN for persons other than
(3) First obtained status as a veteran during the most individuals and the SSNs for all
recent 5-year period. individuals that comprise the person with
A person, other than an individual, may be eligible for the EIN if such individuals have a
veteran farmer or rancher benefits if all substantial substantial beneficial interest in you;
beneficial interest holders qualify as a veteran farmer (4) You must include:
or rancher. A spouse’s veteran status does not impact (i) Your election of plan of insurance and
whether an individual is considered a veteran farmer or any other material information required
rancher. on the application to insure your cattle;
Void - When the Policy is considered not to have and
existed for an insurance period as a result of (ii) All information required in section
concealment, fraud, or misrepresentation. 2(e)(4)(i) or your application will not be
2. Life of Policy, Cancellation, and Termination accepted and no coverage will be
(a) The application must be completed by you and provided;
received by us not later than the sales closing (5) Your application will not be accepted and no
date. If cancellation or termination of insurance insurance will be provided for the year of
coverage occurs for any reason, including but not application if the application does not
limited to indebtedness, suspension, debarment, contain your SSN or EIN. If your application
disqualification, cancellation by you or us or contains an incorrect SSN or EIN for you,
violation of the controlled substance provisions of your application will be considered not to
the Food Security Act of 1985, a new application have been accepted, no insurance will be
must be filed for the crop. provided for the year of application and for
(b) Coverage will not be provided if you are ineligible any subsequent crop years, as applicable,
under the policy or under any Federal statute or and such policies will be void if:
regulation. (i) Such number is not corrected by you; or
(c) Your agent does not have authority to bind (ii) You correct the SSN or EIN but:
coverage under this policy. Coverage for the milk (A) You cannot prove that any error was
described in the application will only become inadvertent (Simply stating the error
effective when we notify you in writing that your was inadvertent is not sufficient to
application has been accepted and approved by prove the error was inadvertent); or
us, and we issue a written summary of insurance (B) It is determined that the incorrect
to you. number would have allowed you to
(1) For subsequent insurance periods, coverage obtain disproportionate benefits
will only be effective if issue a written under the crop insurance program,
summary of insurance to you. you are determined to be ineligible
(2) This policy will be available for sale only on for insurance or you could avoid an
business days when RMA livestock obligation or requirement under any
acceptance system is operational. State or Federal law;
(d) This is a continuous policy and will remain in (6) With respect to persons with a substantial
effect for each crop year following the acceptance beneficial interest in you:
of the original application until canceled by you in (i) The coverage for all livestock or
accordance with the terms of the policy or livestock products included on your
terminated by operation of the terms of the policy application will be reduced
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proportionately by the percentage (8) Notwithstanding any of the provisions in this
interest in you of persons with a section, if you certify to an incorrect SSN or
substantial beneficial interest in you EIN, or receive an indemnity and the SSN or
(presumed to be 50 percent for spouses EIN was not correct, you may be subject to
of individuals) if the SSNs or EINs of civil, criminal or administrative sanctions;
such persons are included on your (9) If any of the information regarding persons
application, the SSNs or EINs are with a substantial beneficial interest in you
correct, and the persons with a changes after the cancellation date for the
substantial beneficial interest in you are previous crop year, you must revise your
ineligible for insurance; application by the cancellation date for the
(ii) Your policies for all livestock or livestock current crop year to reflect the correct
products included on your application, information. However, if such information
and for all applicable crop years, will be changed less than 30 days before the
void if the SSN or EIN of any person with cancellation date for the current crop year,
a substantial beneficial interest in you is you must revise your application by the
incorrect or is not included on your cancellation date for the next crop year. If you
application and: fail to provide the required revisions, the
(A) Such number is not corrected or provisions in section 2(e)(6) will apply; and
provided by you, as applicable; (10) If you are, or a person with a substantial
(B) You cannot prove that any error or beneficial interest in you is, not eligible to
omission was inadvertent (Simply obtain a SSN or EIN, whichever is required,
stating the error or omission was you must request an assigned number for the
inadvertent is not sufficient to prove purposes of this policy from us:
the error or omission was (i) A number will be provided only if you can
inadvertent); or demonstrate you are, or a person with a
(C) Even after the correct SSN or EIN is substantial beneficial interest in you is,
provided by you, it is determined eligible to receive Federal benefits;
that the incorrect or omitted SSN or (ii) If a number cannot be provided for you in
EIN would have allowed you to accordance with section 2(e)(10)(i), your
obtain disproportionate benefits application will not be accepted; or
under the crop insurance program, (iii) If a number cannot be provided for any
the person with a substantial person with a substantial beneficial
beneficial interest in you is interest in you in accordance with section
determined to be ineligible for 2(e)(10)(i), the amount of coverage for all
insurance, or you or the person with crops on the application will be reduced
a substantial beneficial interest in proportionately by the percentage
you could avoid an obligation or interest of such person in you.
requirement under any State or (f) After acceptance of the application, you may not
Federal law; or cancel this policy for the initial crop year.
(iii) Except as provided in sections Thereafter, the policy will continue in force for
2(e)(6)(ii)(B) and (C), your policies will each succeeding crop year unless canceled or
not be voided if you subsequently terminated as provided below.
provide the correct SSN or EIN for (g) Either you or we may cancel this policy after the
persons with a substantial beneficial initial crop year by providing written notice to the
interest in you and the persons are other on or before the cancellation date in
eligible for insurance; accordance with section 2(j).
(7) When any of your policies are void under (h) Any amount owed to us for any policy authorized
sections 2(e)(5) or (6): under the Act will be offset from any indemnity or
(i) You must repay any indemnity that may prevented planting payment due you for this or
have been paid for all applicable any other crop insured with us under the authority
commodities and any crop years of the Act.
determined by us; (1) Even if your claim has not yet been paid, you
(ii) Even though the policies are void, you will must still pay the premium and administrative
still be required to pay an amount equal fee on or before the termination date for you
to 20 percent of the premium that you to remain eligible for insurance.
would otherwise be required to pay; and (2) If we offset any amount due us from an
(iii) If you previously paid premium or indemnity or prevented planting payment
administrative fees, any amount in owed to you, the date of payment for the
excess of the amount required in section purpose of determining whether you have a
2(e)(7)(ii) will be returned to you; delinquent debt will be the date that you
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submit the claim for indemnity in accordance (A) For a policy with unpaid
with section 7(a) (Determining Indemnities). administrative fees or premiums, the
(3) For this agricultural commodity policy, your termination date immediately
premium and administrative fees will be offset subsequent to the billing date for the
from any indemnity or prevented planting crop year (For policies which the
payment due you even if it is prior to the sales closing date is prior to the
premium billing. termination date, such policies will
(4) For any other agricultural commodity policy terminate for the current crop year
insured with us and it is: even if insurance attached prior to
(i) Prior to the premium billing date, and you the termination date. Such
agree, your premium and administrative termination will be considered
fees will be offset from any indemnity or effective as of the sales closing date
prevented planting payment due you; or and no insurance will be considered
(ii) On or after the premium billing date, your to have attached for the crop year
premium and administrative fees will be and no indemnity will be owed);
offset from any indemnity or prevented (B) For a policy with other amounts due,
planting payment due you. the termination date immediately
(i) A delinquent debt for any policy will make you following the date you have a
ineligible to obtain crop insurance authorized delinquent debt (For policies for
under the Act for any subsequent crop year and which the sales closing date is prior
result in termination of all policies in accordance to the termination date, such policies
with section 2(i)(2). will terminate for the current crop
(1) With respect to ineligibility: year even if insurance attached prior
(i) Ineligibility for crop insurance will be to the termination date. Such
effective on: termination will be considered
(A) The date that a policy was terminated effective as of the sales closing date
in accordance with section 2(i)(2) for and no insurance will be considered
the crop for which you failed to pay to have attached for the crop year
premium, an administrative fee, or and no indemnity will be owed);
any related interest owed, as (C) For all other policies that are issued
applicable; by us under the authority of the Act,
(B) The payment due date contained in the termination date that coincides
any notification of indebtedness for with the termination date for the
any overpaid indemnity if you fail to policy with the delinquent debt or, if
pay the amount owed, including any there is no coincidental termination
related interest owed, as applicable, date, the termination date
by such due date; or immediately following the date you
(C) The termination date for the crop year become ineligible;
prior to the crop year in which a (D) For execution of a written payment
scheduled payment is due under a agreement and failure to make any
written payment agreement if you fail scheduled payment, the termination
to pay the amount owed by any date for the crop year prior to the crop
payment date in any agreement to year in which you failed to make the
pay the debt; scheduled payment (for this purpose
(ii) If you are ineligible and a policy has been only, the crop year will start the day
terminated in accordance with section after the termination date and end on
2(i)(2), you will not receive any indemnity the next termination date, e.g., if the
and such ineligibility and termination of termination date is November 30 and
the policy may affect your eligibility for you fail to make a payment on
benefits under other USDA programs. November 15, 2019, your policy will
Any indemnity payment that may be terminate on November 30, 2018, for
owed for the policy before it has been the 2019 crop year); or
terminated will remain owed to you, but (ii) For all policies terminated under sections
may be offset in accordance with section 2(i)(2)(i)(A), (B), or (D), any indemnities
2(h), unless your policy was terminated in paid subsequent to the termination date
accordance with sections 2(i)(2)(i)(A), must be repaid.
(B),or(D). (iii) Once the policy is terminated, it cannot
(2) With respect to termination: be reinstated for the current crop year
(i) Termination will be effective on: unless:
(A) The termination was in error;
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(B) The Administrator of the Risk (ii) The amount of the payment
Management Agency, at his or her was clearly transposed from
sole discretion, determines that the the amount that was
following are met: otherwise due (For example,
(1) In accordance with 7 CFR part you owed $892 but you paid
400, subpart U, and FCIC $829);
procedures, you provide (iii) You timely made the full
documentation that your payment of the amount owed
inadvertent failure to pay your but the delivery of that
debt is due to an unforeseen or payment was delayed, and
unavoidable event or other was postmarked no more
extenuating circumstances that than seven calendar days
created the inadvertent failure for after the termination date or
you to make timely payment; the missed payment date of
(2) You remit full payment of the a previously executed written
delinquent debt owed to us or payment agreement, or in
FCIC with your request the case of overpaid
submitted in accordance with indemnity or any amount that
section 2(i)(2)(iii)(B)(3); and became due after the
(3) You submit a written request for termination date, the due
reinstatement of your policy to us date specified in a notice to
no later than 60 days after the you of an amount due, as
termination date or the missed applicable.
payment date of a previously (iv) For previously executed
executed written payment written payment
agreement, or in the case of agreements, you made the
overpaid indemnity or any full payment of the
amount that became due after scheduled payment amount
the termination date, the due owed within 15 calendar
date specified in the notice to you days after the missed
of the amount due, if applicable. payment date.
(i) If authorization for (2) You remit full payment of the
reinstatement, as defined in delinquent debt owed to us; and
7 CFR part 400, subpart U, is (3) You submit a written request for
granted, your policies will be reinstatement of your policy to us
reinstated effective at the in accordance with 7 CFR part
beginning of the crop year for 400, subpart U, and applicable
which you were determined procedures no later than 30 days
ineligible, and you will be after the termination date or the
entitled to all applicable missed payment date of a
benefits under such policies, previously executed written
provided you meet all payment agreement, or in the
eligibility requirements and case of overpaid indemnity or
comply with the terms of the any amount that became due
policy; and after the termination date, the
(ii) There is no evidence of fraud due date specified in the notice to
or misrepresentation; or you of the amount due, if
(C) We determine that, in accordance applicable; and
with 7 CFR part 400, subpart U, and (4) If authorization for reinstatement,
FCIC issued procedures, the as defined in 7 CFR part 400,
following are met: subpart U, is granted, your
(1) You can demonstrate: policies will be reinstated
(i) You made timely payment effective at the beginning of the
for the amount of premium crop year for which you were
owed but you inadvertently determined ineligible, and you
omitted some small amount, will be entitled to all applicable
such as the most recent benefits under such policies,
month’s interest or a small provided you meet all eligibility
administrative fee; requirements and comply with
the terms of the policy; and
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(5) There is no evidence of fraud or You will not be eligible to apply for crop
misrepresentation. insurance for any crop until after the amounts
(iv) A determination made under: owed are paid in full or you file a petition to
(A) Section 2(i)(2)(iii)(B) may only be discharge the debt in bankruptcy.
appealed to the National Appeals (6) If you are determined to be ineligible under
Division in accordance with 7 CFR section 2(i), persons with a substantial
part 11; and beneficial interest in you may also be
(B) Section 2(i)(2)(iii)(C) may only be ineligible until you become eligible again.
appealed in accordance with section (j) In cases where there has been a death,
19. disappearance, judicially declared incompetence,
(3) To regain eligibility, you must: or dissolution of any insured person:
(i) Repay the delinquent debt in full; (1) If any married individual insured dies,
(ii) Execute a written payment agreement, in disappears, or is judicially declared
accordance with 7 CFR part 400, subpart incompetent, the named insured on the policy
U, and make payments in accordance will automatically convert to the name of the
with the agreement; or spouse if:
(iii) Have your debts discharged in (i) The spouse was included on the policy
bankruptcy. as having a substantial beneficial interest
(4) After you become eligible for crop or livestock in the named insured; and
insurance, if you want to obtain coverage for (ii) The spouse has a share of the crop.
your crops or livestock, you must submit a (2) The provisions in section 2(j)(3) will be
new application on or before the sales closing applicable if:
date for the crop (Since applications for crop (i) Any partner, member, shareholder, etc.,
insurance cannot be accepted after the sales of an insured entity dies, disappears, or
closing date, if you make any payment after is judicially declared incompetent, and
the sales closing date, you cannot apply for such event automatically dissolves the
insurance until the next available sales entity; or
closing date). (ii) An individual, whose estate is left to a
(5) For example, for the 2020 crop year, if you beneficiary other than a spouse or left to
purchase Livestock Gross Margin (LGM), the spouse and the criteria in section
with a termination date of June 30, 2020, and 2(j)(1) are not met, dies, disappears, or is
you do not pay the premium or other amounts judicially declared incompetent.
due for LGM by the termination date, your (3) If section 2(j)(2) applies and the death,
livestock policies will terminate retroactive to disappearance, or judicially declared
the sales closing date that is immediately incompetence occurred:
subsequent to the sales period for which the (i) More than 30 days before the
premium is delinquent, even if insurance has cancellation date, the policy is
already attached to a subsequent sales automatically canceled as of the
period. The ineligibility date would be June cancellation date and a new application
30, 2020. In accordance with section must be submitted; or
2(i)(2)(i)(C), for any other policy issued under (ii) Thirty days or less before the
the authority of the Federal Crop Insurance cancellation date, or after the
Act that does not have the same termination cancellation date, the policy will continue
date of June 30, the termination for such in effect through the crop year
other policy will be effective on the immediately following the cancellation
termination date following when you become date and be automatically canceled as of
ineligible. For example, a producer the cancellation date immediately
purchased an LGM policy on July 31, 2020, following the end of the insurance period
and did not pay the premium by the premium for the crop year, unless canceled by the
due date and subsequently purchased a cancellation date prior to the start of the
Federal reinsured corn policy on March 15, insurance period:
2021. The LGM policy is terminated June 30, (A) A new application for insurance must
2021, and the producer is ineligible for any be submitted prior to the sales
livestock plan of insurance as of the next closing date for coverage for the
sales closing date after June 30, 2021. subsequent crop year; and
However, the Federal reinsured corn policy (B) Any indemnity will be paid to the
would remain in effect for 2021 and would be person or persons determined to be
terminated as of March 15, 2022 if the LGM beneficially entitled to the payment
premium remained delinquent. No indemnity and such person or persons must
will be due for that crop year for either crop.
(8 of 15)22-LGM Dairy Cattle
comply with all policy provisions and trading at the end of the day (such as the price
pay the premium. moved the maximum allowed by the exchange
(4) If any insured entity is dissolved for reasons and trading was suspended), for any day that the
other than death, disappearance, or judicially information is needed.
declared incompetence: (1) LGM for Dairy Cattle will not be offered if
(i) Before the cancellation date, the policy is CME Group Class III milk futures prices
automatically canceled as of the decline by the maximum allowed by the
cancellation date and a new application exchange two consecutive days during the
must be submitted; or time period for establishing the expected
(ii) On or after the cancellation date, the gross margins.
policy will continue in effect through the (2) LGM for Dairy Cattle will not be offered if
crop year immediately following the CME Group soybean meal or CME Group
cancellation date and be automatically corn futures prices increase by the maximum
canceled as of the cancellation date allowed by the exchanges two consecutive
immediately following the end of the days during the time period for establishing
insurance period for the crop year, unless the expected gross margins.
canceled by the cancellation date prior to 3. Insurance Coverages
the start of the insurance period: (a) Your gross margin guarantee, deductible, and
(A) A new application for insurance must maximum premium for the insurance period are as
be submitted prior to the sales shown on your summary of insurance.
closing date for coverage for the (b) You must select a deductible by the sales closing
subsequent crop year; and date.
(B) Any indemnity will be paid to the (c) You may only select one deductible that is
person or persons determined to be applicable for all target marketings.
beneficially entitled to the payment (d) Target marketings must be submitted on our form
and such person or persons must by the sales closing date for each insurance period
comply with all policy provisions and in which you desire coverage. If target marketings
pay the premium. are not submitted by the sales closing date, your
(5) If section 2(j)(2) or (4) applies, a remaining target marketings for the insurance period will be
member of the insured person or the zero.
beneficiary is required to report to us the (e) Target marketings for any month of an insurance
death, disappearance, judicial incompetence, period cannot be greater than the approved target
or other event that causes dissolution not marketings for that insurance period. Your target
later than the next cancellation date, except if marketings are due at the time of application in the
section 2(j)(3)(ii) applies, notice must be initial insurance period and your target marketings
provided by the cancellation date for the next report is due by the sales closing date in
crop year. If notice is not provided timely, the subsequent insurance periods.
provisions of section 2(j)(2) or (4) will apply (f) No indemnity will be owed, but you will still be
retroactive to the date such notice should responsible for any premiums owed, if we find that
have been provided and any payments made your marketing report:
after the date the policy should have been (1) Is not supported by written verifiable records in
canceled must be returned. accordance with the definition of marketing
(k) We may cancel your policy if no premium is report; or
earned for three consecutive years. (2) Fails to accurately report actual marketings or
(l) The cancellation date is June 30 for the policy. other material information.
(m) Any person may sign any document relative to (g) Coverage can be purchased from the time during
crop insurance coverage on behalf of any other the sales period or as otherwise specified in the
person covered by such a policy, provided that Special Provisions. Coverage is not available for
the person has a properly executed power of purchase if expected milk and feed prices are not
attorney or such other legally sufficient document available on the RMA website.
authorizing such person to sign. You are still (h) Sales of LGM may be suspended for the next sales
responsible for the accuracy of all information period if unforeseen and extraordinary events
provided on your behalf and may be subject to occur that interfere with the effective functioning of
any applicable consequences, if any information the corn, soybean meal, or milk commodity
has been misreported. markets. Evidence of such events may include,
(n) LGM for Dairy Cattle will not be offered for a sales but is not limited to, consecutive limit down moves
period if the required data for establishing the in the milk futures markets or limit up moves in the
expected gross margins for each month of the corn and soybean meal contracts.
insurance period are not available because 4. Causes of Loss Covered
futures did not trade, or were not able to continue This policy provides insurance only for the difference
(9 of 15)22-LGM Dairy Cattle
between the actual gross margin and the gross margin (A) Compliance with the conservation
guarantee resulting from unavoidable natural provisions specified in section 5(g)(1)
occurrences as required by the Act. This policy does of this section; and
not insure against the death or other loss or destruction (B) Filing form AD-1026, or successor
of your dairy cattle, or against any unexpected decline form, to be properly identified as in
in milk production, or in other loss or damage of any compliance with the conservation
kind whatsoever. provisions specified in section 5(g)(1)
5. Premium of this section.
(a) The premium (gross premium less premium 6. Insurance Period
subsidy paid on your behalf by FCIC) is earned (a) Coverage begins on your milk on the first day of
and payable at the time coverage begins. the second calendar month following the month of
(b) You are only eligible for premium subsidy if you the sales closing date, unless otherwise specified
target market in two (2) or more months of an in the Special Provisions. For example for
insurance period. contracts with a sales closing date in January,
(c) The premium amount is shown on your summary coverage will begin on March 1.
of insurance. (b) Coverage ends at the earliest of:
(d) The premium will be based on the information you (1) The last month of the insurance period in
provide on your application. which you have target marketings.
(e) Premium or administrative fees owed by you will (2) As otherwise specified in the policy.
be offset from an indemnity or prevented planting (3) If the end date is on a Saturday, Sunday,
payment due you in accordance with section 2(h). or federal holiday or, if for any reason the
(f) If you qualify as a beginning farmer or rancher, relevant report is not available to us for that
your premium subsidy will be 10 percentage points day or any other day of the ending period,
greater than the premium subsidy that you would then the actual ending value will be based
otherwise receive, unless otherwise specified in on the most recent reports made prior to that
the Special Provisions. date.
(g) You will be ineligible for any premium subsidy paid 7. Determining Indemnities
on your behalf by FCIC for any policy issued by us (a) In the case of a payable loss on insured milk, we
if: will send you a notice of probable loss
(1) USDA determines you have committed a approximately ten days after all actual gross
violation of the highly erodible land margins applicable for the insurance period are
conservation or wetland conservation released by RMA. You must submit a marketing
provisions of 7 CFR part 12 as amended by report, within 15 days of your receipt of the notice
the Agricultural Act of 2014; or of probable loss.
(2) You have not filed form AD-1026 with FSA for (b) In the event of loss covered by this policy, we will
the reinsurance year by the premium billing settle your claim by subtracting the actual total
date. gross margin from the gross margin guarantee. If
(i) Notwithstanding section 5(g)(2), you may the result is greater than zero, an indemnity will be
be eligible for premium subsidy without paid. Under no circumstances will the indemnity
having a timely filed form AD-1026: be greater than your total target marketings
(A) For the initial reinsurance year if you multiplied by the three-day average CME Group
certify by the premium billing date for Class III milk futures price established at the
your policy that you meet the beginning of the insurance period.
qualifications as outlined in FCIC (c) In the event that the total of actual marketings are
approved procedures for producers less than 75 percent of the total of targeted
who are new to farming, new to crop marketings for the insurance period, indemnities
insurance, a new entity, or have not will be reduced by the percentage by which the
previously been required to file form total of actual marketings for the insurance period
AD-1026; or fell below the total of target marketings for the
(B) If FSA approves relief for failure to period.
timely file due to circumstances 8. Conformity to Food Security Act
beyond your control or failure to timely Although your violation of a number of federal
provide adequate information to statutes, including the Act, may cause cancellation
complete form AD-1026 in or termination of the policy or may cause the policy
accordance with the provisions to become void, you should be specifically aware
contained in 7 CFR part 12. that your policy will be canceled if you are determined
(ii) To be eligible for premium subsidy paid on to be ineligible to receive benefits under the Act due
your behalf by FCIC, it is your to violation of the controlled substance provisions
responsibility to assure you meet all the (title XVII) of the Food Security Act of 1985 (Pub. L.
requirements for: 99-198) and the regulations published at 7 CFR part
(10 of 15)22-LGM Dairy Cattle
400, subpart F. Your policy will be canceled if you (a) You may not bring legal action against us unless
are determined, by the appropriate agency, to be you have complied with all of the policy provisions.
in violation of these provisions. We will recover any (b) If you do take legal action against us, you must do
and all monies paid to you or received by you during so within 12 months after denial of your claim. Suit
your period of ineligibility, and your premium will be must be brought in accordance with the provisions
refunded, less a reasonable amount for expenses of 7 U.S.C. 1508(j).
and handling not to exceed 20 percent of the total (c) Under no circumstances will we be liable for the
premium. payment of damages (compensatory, punitive, or
9. Amounts Due Us other), attorneys’ fees, or other charges in
(a) Interest will accrue at the rate of 1.25 percent connection with any claim for indemnity, whether
simple interest per calendar month on any unpaid we approve or disapprove such claim.
amount owed to us or on any unpaid administrative 11. Payment and Interest Limitations
fees owed to FCIC. We will pay simple interest computed on the net
(1) For the purpose of premium amounts owed to indemnity ultimately found to be due by us or by a final
us or administrative fees owed to FCIC, judgment of a court of competent jurisdiction, from and
interest will start to accrue on the first day of including the 61st day after the date you sign, date, and
the month following the issuance of the notice submit to us the properly completed marketing report.
by us, provided that a minimum of 30 days Interest will be paid only if the reason for our failure to
have passed from the premium billing date timely pay is NOT due to your failure to provide
specified in the actuarial documents. information or other material necessary for the
(2) We will collect any unpaid amounts owed to us computation or payment of the indemnity. The interest
and any interest owed thereon, and, prior to rate will be that established by the Secretary of the
the termination date, we will collect any Treasury under section 12 of the Contract Disputes Act
administrative fees and interest owed thereon of 1978 (41 U.S.C. 611) and published in the Federal
to FCIC. Register semiannually on or about January 1 and July
(3) After the termination date, FCIC will collect any 1 of each year and may vary with each publication.
unpaid administrative fees and any interest 12. Concealment, Misrepresentation or Fraud
owed thereon for any catastrophic risk (a) If you have falsely or fraudulently concealed the
protection policy and we will collect any unpaid fact that you are ineligible to receive benefits under
administrative fees and any interest owed the Act or if you or anyone assisting you has
thereon for additional coverage policies. concealed or misrepresented any material fact
(b) For the purpose of any other amounts due us, such relating to this Policy:
as repayment of indemnities found not to have (1) This policy will be void; and
been earned, interest will start to accrue on the date (2) You may be subject to remedial sanctions in
that notice is issued to you for the collection of the accordance with 7 CFR part 400, subpart R.
unearned amount. (b) Voidance of this policy will result in you having to
(1) Amounts found due under this paragraph will reimburse all indemnities paid for the insurance
not be charged interest if payment is made period.
within 30 days of issuance of the notice by us. (c) Voidance will be effective on the first day of the
(2) The amount will be considered delinquent if not insurance period for the crop year in which the act
paid within 30 days of the date the notice is occurred and will not affect the policy for
issued by us. subsequent insurance periods unless a violation of
(c) All amounts paid will be applied first to expenses this section also occurred in such insurance
of collection, if any, second, to the reduction of periods.
accrued interest, and then to the reduction of the (d) Even though this policy is void, you will still be
principal balance. required to pay the administrative and operating
(d) If we determine that it is necessary to contract expenses contained on your premium statement to
with a collection agency or to employ an attorney offset costs incurred by us in the service of this
to assist in collection, you agree to pay all the policy.
expenses of collection. (e) If you willfully and intentionally provide false or
(e) The portion of the amounts owed by you for a policy inaccurate information to us or FCIC or you fail to
authorized under the Act that are owed to FCIC comply with a requirement of FCIC, in accordance
may be collected in part through administrative with 7 CFR part 400, subpart R, FCIC may impose
offset from payments you receive from United on you:
States government agencies in accordance with 31 (1) A civil fine for each violation in an amount not
U.S.C. chapter 37. Such amounts include all to exceed the greater of:
administrative fees, and the share of the overpaid (i) The amount of the pecuniary gain
indemnities and premiums retained by FCIC plus obtained as a result of the false or
any interest owed thereon. inaccurate information provided or the
10. Legal Action Against Us noncompliance with a requirement of
(11 of 15)22-LGM Dairy Cattle
FCIC; or executed assignment of indemnity, we will not
(ii) $10,000; and make any payment to a lienholder or other person
(2) A disqualification for a period of up to 5 years to whom you have a financial debt or other
from receiving any monetary or non-monetary pecuniary obligation even if you may have a lien or
benefit provided under each of the following: other assignment recorded elsewhere. Under no
(i) Any crop insurance policy offered under circumstances will we be liable:
the Act; (1) To any lienholder or other person to whom you
(ii) The Farm Security and Rural Investment have a financial debt or other pecuniary
Act of 2002 (7 U.S.C. 7333 et seq.); obligation where you have failed to include
(iii) The Agricultural Act of 1949 (7 U.S.C. such lienholder or person on a properly
1421 et seq.); executed assignment of indemnity provided to
(iv) The Commodity Credit Corporation us; or
Charter Act (15 U.S.C. 714 et seq.); (2) To pay to all lienholders or other persons to
(v) The Agricultural Adjustment Act of 1938 (7 whom you have a financial debt or other
U.S.C. 1281 et seq.); pecuniary obligation any amount greater than
(vi) Title XII of the Food Security Act of 1985 the total amount of indemnity owed under the
(16 U.S.C. 3801 et seq.); policy.
(vii) The Consolidated Farm and Rural (d) If we have received the properly executed
Development Act (7 U.S.C. 1921 et seq.); assignment of indemnity form:
and (1) Only one payment will be issued jointly in the
(viii) Any federal law that provides assistance to names of all assignees and you; and
a producer of an agricultural commodity (2) Any assignee will have the right to submit all
affected by a crop or livestock loss or a loss notices and forms as required by the
decline in the prices of agricultural policy.
commodities. (e) If you have suffered a loss from an insurable cause
13. Transfer of Coverage and Right to Indemnity and fail to file a claim for indemnity within the period
If you transfer any of your milk during the insurance specified in section 7(a), the assignee may submit
period, you may transfer your coverage rights, if the claim for indemnity not later than 15 days after
the transferee is eligible for crop or livestock the period for filing a claim has expired. We will
insurance. honor the terms of the assignment only if we can
(a) We will not be liable for any more than the accurately determine the amount of the claim.
liability determined in accordance with your However, no action will lie against us for failure to
policy that existed before the transfer occurred. do so.
(b) The transfer of coverage rights must be on 15. Descriptive Headings
our form and will not be effective until approved The descriptive headings of the various policy
by us in writing. provisions are formulated for convenience only and are
(c) Both you and the transferee are jointly and not intended to affect the construction or meaning of
severally liable for the payment of the premium. any of the policy provisions.
(d) The transferee has all rights and 16. Notices
responsibilities under this policy consistent with (a) All notices required to be given by you must be in
the transferee’s interest. writing and received by the insurance agent
(e) If the transferee is not eligible for livestock identified in your application within the designated
insurance for any reason, and the transfer time unless otherwise provided by the notice
occurs before the final 30 days of the insurance requirement.
period, then the transferred portion of the (1) Notices required to be given immediately may
coverage will be terminated and no premium for be by telephone or in person and confirmed in
that portion will be refunded. writing.
14. Assignment of Indemnity (2) Time of the notice will be determined by the
(a) You may assign your right to an indemnity for the time of our receipt of the written notice. If the
crop year only to creditors or other persons to date by which you are required to submit a
whom you have a financial debt or other pecuniary report or notice falls on Saturday, Sunday, or
obligation. You may be required to provide proof of a federal holiday, or if your agent's office is, for
the debt or other pecuniary obligation before we any reason, not open for business on the date
will accept the assignment of indemnity. you are required to submit such notice or
(b) All assignments must be on our form and must be report, such notice or report must be submitted
provided to us. Each assignment form may contain on the next business day.
more than one creditor or other person to whom (b) All policy provisions, notices and communications
you have a financial debt or other pecuniary required to be sent by us to you will be provided by
obligation. electronic means, unless we do not have the ability
(c) Unless you have provided us with a properly to transmit such information to you by electronic
(12 of 15)22-LGM Dairy Cattle
means; or you elect to receive a paper copy of maintain such records will result in no indemnity
such information. being due and since the denial of indemnity is
17. Applicability of State and Local Statutes based on a breach of the policy for the insurance
If the provisions of this policy conflict with statutes of period, you will still be required to pay all premiums
the state or locality in which this policy is issued, the owed.
policy provisions will prevail. State and local laws and (c) Any person designated by us, and any employee
regulations in conflict with federal statutes or of USDA, will, at any time during the record
regulations do not apply to this policy. retention period, have access:
18. Other Insurance (1) To any records relating to this insurance at any
Nothing in this section prevents you from obtaining location where such records may be found or
other insurance not authorized under the Act. However, maintained; and
unless specifically required by policy provisions, you (2) To the farm.
must not obtain any other livestock insurance issued (d) By applying for insurance under the authority of the
under the authority of the Act on the insured dairy cattle Act or by continuing insurance for which you
or milk. If you cannot demonstrate that you did not previously applied, you authorize us, or any person
intend to have more than one policy or endorsement in acting for us, to obtain records relating to the
effect, you may be subject to the consequences insured milk from any person who may have
authorized under this policy, the Act, or any other custody of those records including, but not limited
applicable statute. If you can demonstrate that you did to, packers, banks, shippers, sale barns, terminals,
not intend to have more than one policy in effect (For cooperatives, associations, and accountants. You
example, an application to transfer your policy or written must assist us in obtaining all records that we
notification to an insurance provider that states you request from third parties.
want to purchase, or transfer, insurance and you want 20. Mediation, Arbitration, Appeal, Reconsideration,
any other policies for the livestock canceled would and Administrative and Judicial Review
demonstrate you did not intend to have duplicate (a) If you do not agree with any determination made
policies), and: by us, the disagreement may be resolved through
(1) Both are for LGM policies, the policy with the mediation in accordance with section 20(f). If the
earliest date of application will be in force and the disagreement cannot be resolved through
other policy will be void, unless both policies are mediation, or you and we do not agree to
with: mediation, you must timely seek resolution through
(i) The same insurance provider and the arbitration in accordance with the rules of the
insurance provider agrees otherwise; or American Arbitration Association (AAA), except as
(ii) Different insurance providers and both provided in sections 20(c) and (e), and unless rules
insurance providers agree otherwise. are established by FCIC for this purpose. Any
(2) One policy is LGM and the other is a livestock mediator or arbitrator with a familial, financial or
policy insuring the same cattle for the insurance other business relationship to you or us, or our
period, the policy with the earliest date of agent or loss adjuster, is disqualified from hearing
endorsement for the insurance period will be in
the dispute.
force and the other endorsement will be void.
(1) All disputes involving determinations made by
19. Access to Insured Milk and Records, and Record
Retention us are subject to mediation or arbitration.
(a) We, and any employee of USDA, reserve the right However, if the dispute in any way involves a
to examine the dairy herd of the insured producer, policy or procedure interpretation, regarding
and all records relating to sale of the milk as often whether a specific policy provision or
as we reasonably require during the record procedure is applicable to the situation, how it
retention period. is applicable, or the meaning of any policy
(b) For three years after the end of the insurance provision or procedure, either you or we must
period, you must retain, and provide upon our obtain an interpretation from FCIC in
request, or the request of any USDA employee, accordance with 7 CFR part 400, subpart X or
complete records of the purchase, feeding (used to such other procedures as established by
determine capacity only), shipment, sale, or other FCIC.
disposition of all the insured milk. This requirement (i) Any interpretation by FCIC will be binding
also applies to the records to establish the basis for in any mediation or arbitration.
the marketing report for each insurance period. (ii) Failure to obtain any required
You must also provide upon our request, or the interpretation from FCIC will result in the
request of any USDA employee, separate records nullification of any agreement or award.
showing the same information from any milk not (iii) An interpretation by FCIC of a procedure
insured. We may extend the record retention may be appealed to the National Appeals
period beyond three years by notifying you of such Division in accordance with 7 CFR part 11.
extension in writing. Your failure to keep and
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