Managing Risk with Pasture, Rangeland, and Forage Insurance for 2014 - UNL CropWatch, Oct. 2013

Managing Risk with Pasture, Rangeland, and Forage Insurance for 2014 - UNL CropWatch, Oct. 2013

October 10, 2013

The USDA Risk Management Agency is once again offering Pasture, Rangeland, and Forage (PRF) insurance for the 2014 crop year. PRF coverage is a risk management tool that producers should consider using to provide income to offset loss of forage production due to drought conditions.

The PRF insurance will be using the Rainfall Index system of coverage, as it first did in 2013. The Rainfall Index model is based on weather data (precipitation) collected and maintained by NOAA’s Climate Prediction Center. The index reflects how much precipitation is received relative to the long-term average for a specified grid area during a given two-month period.

Insurance premiums and indemnities are based on the level of coverage (70% - 90%) and level of production (60% - 150%) insured. The federal government subsidizes 51% to 59% of the cost, depending on the coverage level.

Producers can insure their land for either grazing or for haying. For land that is insured for haying, forage production must come from perennial forages such as grass or alfalfa. Annual forages are not eligible under this program.

Producers using this insurance will need to choose which time periods throughout the year they wish to insure. More information and a decision support tool to aid in decision-making is available at http://www.rma.usda.gov/policies/pasturerangeforage/

Using the online support tools, producers can identify the grid area(s) where their land is located. Rainfall Index data are available going back to 1948 for each grid area, and producers can evaluate how different coverage options would have performed in any particular year for each grid.

Producers should consider several issues as they evaluate using PRF as a risk management tool.

  1. The best approach for reducing potential drought impact is insuring periods that would have the greatest impact on forage production. Research indicates that precipitation from April through July accounts for a majority of the variation in forage production in Nebraska.
     
  2. Because the rainfall index is calculated using precipitation data from NOAA weather stations, the rainfall index for a producer’s grid area may not exactly reflect a producer’s own rainfall experience. As a result, the rainfall index may not precisely reflect changes in forage production. Over the long term these differences should even out, but there may be discrepancies in any particular year.
     
  3. This insurance product is best utilized over the long term where a producer participates every year and doesn’t try to outguess what the next year will bring. Taking the premium subsidies into account, producers should more than recover their premiums if they participate over a period of many years.

Resources

For more information see the recently released UNL Extension NebGuide, Pasture, Rangeland, and Forage Insurance: A Risk Management Tool for Hay and Livestock Producers."

A UNL Extension webinar, produced by Extension Educator Aaron Berger, explains how the product works and can be used in Nebraska. See Pasture Rangeland and Forage Insurance in Nebraska.

The deadline for participating in the PRF Insurance program for 2014 is Nov.15. PRF is sold through local crop insurance agents, just like traditional crop insurance. If you cannot find a local agent who handles PRF, you can use RMA’s Agent Locator, found online at www3.rma.usda.gov/tools/agents/‎ to search for other agents.

Monte Vandeveer and Aaron Berger
UNL Extension Educators