Over the last few weeks, we received a number of questions on eligibility for Cull Cows type. Presented cases fall into two categories: (1) dairy farmers selling older cows on a local auction, rather than directly to a packer, and (2) beef producers buying old dairy cows, feeding them for 3 months, then selling them to a packer.

The SCE provisions define cull cows as: 

Cull cows – Dairy cows removed from the herd and marketed for slaughter as beef, expected to grade USDA Standard or lower.  

First, the definition does not restrict the eligibility to licensed dairy operation. Any person who is marketing cows that were used as milking cows in a dairy herd to a packer is clearly marketing “dairy cows removed from the herd” for “slaughter as beef”. Therefore, a beef producer who acquires dairy cows and intends to sell them to a slaughterhouse can indeed use this type to protect against the risk that the price of cull cows will decline during the period they are placed on feed. 

Next, can a dairy farmer protect cows they expect to sell at a local auction? Similar to other underwriting language in LRP, what matters here is the intent: “marketed for slaughter” means “that insured intends to market for slaughter”. In other words, the seller reasonably believes that the buyer will either harvest the cows for beef immediately, or will feed them out and then sell for beef in a few months. The intent can be inferred from the pregnancy status of the cow. If the cow is pregnant at the time of sale, and marketing records confirm that, then such a cow must be considered as a replacement cow, and is ineligible for the cull cow type.

Finally, while we cleared this blog post language with RMA staff, the usual disclaimers apply – agents are advised to check with their AIP before proceeding. Only RMA can issue official policy interpretations, typically in response to a direct inquiry by an AIP.