Although producers can choose to insure under either coverage option (AB or SK/MB), they are encouraged to select the option which best reflects the market in which they will sell their cattle. This best insures the market risk they face. For example, a Saskatchewan producer that operates in close proximity to the Alberta border, and markets cattle at an Alberta auction market, may choose to insure his feeder cattle using the Alberta LPI-Feeder option rather than that of Saskatchewan/Manitoba. If a producer chooses to insure under an index outside of the province they will sell their livestock in, the producer may not receive the indemnity that best relates to the cash market decline experienced while selling cattle (leaving himself open to additional market risk).
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