Pasture, Rangeland, Forage (PRF) Enrollment Open; a Risk Management Tool Cattlemen Should Consider

Mike Estadt, OSU Extension Educator, Pickaway County

Cattlemen and hay producers have an opportunity to enroll in an area-based insurance program that protects them against yield losses caused by low precipitation This management tool is designed to give the policy holder the ability to help cover the replacement feed costs when a loss of forage for grazing or harvested for hay occurs because of the lack of rainfall

Area-based means that indemnity payments will not be based upon individual producer’s experience, rather,  payments will be based upon a grid’s deviation from historically normal rainfall.  A producer will have to make several choices including the coverage level of forage production they wish to insure, the rainfall index (months of precipitation), the productivity level of the field or fields they wish to enroll and the number of acres they wish to insure.

Let us explore these choices in a bit of detail.  It is important that the producer select the correct grid for the field or fields that they wish to insure against loss.  Each grid is roughly a 17 square mile area equal to 0.25 degrees in latitude by 0.25 degrees in longitude. The pin in Figure 1  is the Eastern Research Station in Noble County.  Each  grid  is given a specific number code.  The grids  do not follow state or county lines that other USDA crop insurance programs are based upon. (Figure 1.)  The grid locator tool is available at: https://prodwebnlb.rma.usda.gov/apps/prf

Figure 1. Grid locator will enable producers to identify their field locations for their insurance policy. The pin in this example is the Eastern Research Station located in Noble County.

Producers then must select two, two-month indexes to insure against.  These indexes have been calculated using rainfall data based upon NOAA data from 1948 to the present.  Rainfall data will then be  collected by the National Oceanic and Atmospheric Administration Climate Prediction Center for the entire grid and not on rainfall that occurs at the farm level.   This may result in your farm experiencing a loss of production but the not the grid or vice versa.   Producers should critically analyze the historical data for the grids they are selecting as this is probably the most critical element of the risk tool.

Productivity Factor.  The producer may customize their PRF insurance policy based upon each individual farm.  The selection factors range between 60% and 150% of the county-based value of production. Grazers and hay producers should match the amount of protection that best represents their specific grazing or hay operation.  For example, a farmer with well fertilized hay or pasture ground may select a productivity factor greater than 100 percent to increase the level of coverage. Increases the productivity will increase the premium cost.

Coverage Level.  A producer will select the coverage level  between 70% and 90% in 5% increments.  The coverage level establishes the rainfall deviation from the index when insurance pays an indemnity.  The government will pay varying amounts of the premium based upon the level chosen.

How is a payment triggered?  When the interpolated precipitation falls below average for the index interval, it triggers a loss payment to all producers who have signed up for the program in the grid that are covered under this interval. Losses are calculated based on whether the current year’s precipitation in a grid has deviated from normal compared to the historical normal precipitation in the same grid, for the same period. Losses are not based on a single farm or a specific weather station in a general area.  For example, if a farmer selected 90 percent coverage, then the final grid index must be below 90 for that two-month interval to trigger an indemnity payment.

Decision Support Tool. A decision support tool is available to assist growers assess the different possible outcomes based upon historical grid index rainfall and various levels of coverage.  Producers can select their grid location and compare various protection levels, premium payments, subsidies, index values and indemnities that would have been paid for any historical year.  (Figure 2).

Figure 2. Producers can use the decision tool website to compare of PRF insurance would have performed given different scenarios of coverage, index months insured and historical rainfall.

Pasture Example.  Let assume the 200 acres of pastures in Noble County, Ohio, grid location 23894 ,  Elected 90% coverage, 140% productivity factor.  The selected index months of June-July (60%) and April-May(40%).  Table 1. demonstrates what the expected indemnity payment would have been 2016, a dry year in Noble County.  A premium of $3.79 per acre would have resulted in an indemnity of $20.80.

Table 1. PRF insurance, grazing example, per acre.

For a more detailed explanation of the Pasture, Rangeland and Forage protection program there is a comprehensive fact sheet at https://www.rma.usda.gov/en/News-Room/Frequently-Asked-Questions/Pasture-Rangeland-Forage

For more information about this insurance tool, contact a crop insurance agent.  Crop insurance agents are the best source of information and can sit down with you and run through the decision tool to select the best options for your farming operation.  Deadline for enrollment is December 1, 2021.