by: Eric Richer, Mike Estadt, Aaron Wilson (OSU Extension)
Those producers who have grazing and/or forage production as a part of your operation may consider Pasture, Rangeland and Forage (PRF) insurance as part of a production risk management strategy. Our colleague, Mike Estadt, Extension Educator, Pickaway County, introduced our readers to the product in this article in November 2021. Extension Livestock Marketing Specialists Dr. Kenny Burdine (Unv. of Kentucky) and James Mitchell (Unv. of Arkansas) have since discussed PRF insurance here: Burdine and Mitchell.
This article shall serve as a quick review of the insurance product. PRF is a single-peril (rainfall only) and area-based insurance product. It covers less than average rainfall levels in a particular grid up to the level of coverage that a farmer selects. Normal rainfall and deviations from normal rainfall are measured through the National Oceanic and Atmospheric Administration Climate Prediction Center (NOAA CPC). 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.
To sign up or find out more about this product, we encourage you to first meet with your crop insurance agent (we are not insurance agents). If you do not already have an insurance agent, the United State Department of Agriculture-Risk Management Association (USDA-RMA) has an agent locator which may be helpful.
Second, you will want to make sure your pastures, rangelands, or forage (hay) fields have a farm serial number (FSN) at the local Farm Service Agency office (ie. you have reported your crop acres by the required deadlines). Those reported acres will allow you to identify the grid in which your FSN is located. Furthermore, and unlike many other crop insurance policies, you only need enroll a portion of your reported acres. For example, if you only want to enroll 10 acres out of 100 total alfalfa acres, you can. Total reported PRF acres will limit your maximum enrollment.
The third step would be to identify your grid where coverage is sought. A grid in PRF insurance is approximately 17 square miles. Here is RMA’s grid locator tool.
The product then requires you to select at least two but no more than five, 2-month periods in which you want covered. No one month can be selected in more than one period (ex. you must select June-July or July-August; July cannot be selected twice). Finally, these 2-month periods do not need to coincide with normal forage or pasture production months.
The fifth step is to customize their policy based upon each crop in each grid with a productivity index (PI) ranging from 60% to 150% of the county-based value of production. For example, a pasture may get a lower PI than a highly productive forage alfalfa crop. Lower PI’s translate into lower premiums and higher PI’s to higher premiums, relatively speaking. Selecting a PI of 100% would assume that you want to insure “normal” production.
Finally, a producer will need to select a coverage level from 70%-90% in 5% increments, like other crop insurance products. Coverage levels can vary by crop (ex. Alfalfa for forage can have different coverage than red clover for forage).
Indemnities are triggered when the NOAA CPC rainfall falls below the average for the specific 2-month at the level of coverage identified in the policy. The productivity index (PI) is factored into the indemnity payment at the index level selected. Future articles will address indemnity scenarios.
Overall, the PRF insurance product allows for significant customization by crop, grid, productivity index, and coverage level. It is important to remember that it only protects against low rainfall periods, not periods of excess precipitation. RMA does provide a decision support tool to evaluate historic weather data by grid and month and potential premiums and indemnities. Decision Support Tool.
A 2024 Weather Outlook from a 10,000-foot view.
NOTE: The following is intended to highlight national climate outlook products. The information in this article is NOT A FORECAST and should not be considered as such when deciding on an individual’s participation in the PRF insurance product.
Predicting the weather more than a few days out comes with a high degree of risk, and using historical observations under certain conditions in the past does not guarantee the same outcomes under similar conditions in the future. However, meteorologists analyze long-term weather patterns to get a sense of what might be expected when similar conditions are present.
Currently, the globe is experiencing a strong ‘El Nino’ – an oceanic-atmospheric phenomenon where the sea surface temperatures in the tropical Pacific Ocean are warmer than usual. This often leads to changes in the weather including weakening trade winds in the tropical Pacific region, an extended Pacific jet stream causing wetter than unusual conditions to spread across the southern United States, and warmer, drier conditions across the northern U.S. during the winter season. [For more information, please visit NOAA: National Ocean Service].
Burdine, Kenny. “Consider Pasture, Rangeland, and Forage Insurance as a Risk Management Tool.” Ohio BEEF Cattle Letter. Department of Extension, College of Food, Agricultural, and Environmental Sciences, Ohio State University, November 2, 2022.
Estadt, Mike. “Pasture, Rangeland, Forage (PRF) Enrollment Open; A Risk Management Tool Cattlemen Should Consider.” Ohio BEEF Cattle Letter. Department of Extension, College of Food, Agricultural, and Environmental Sciences, Ohio State University, November 3, 2021. https://u.osu.edu/beef/2021/11/03/pasture-rangeland-forage-prf-enrollment-open-a-risk-management-tool-that-cattlemen-should-consider/
Mitchell, James. “Introduction to Pasture, Rangeland, and Forage Insurance for Forage Risk Management.” Cattle Market Notes Weekly. Departments of Extension; University of Arkansas, University of Kentucky, Mississippi State University. https://mailchi.mp/433935e5e695/cattle-market-notes-weekly-20235990?e=97693da52e
“Pasture, Rangeland, Forage Frequently Asked Questions. United States Department of Agriculture-Risk Management Agency. October 14, 2022. https://www.rma.usda.gov/en/News-Room/Frequently-Asked-Questions/Pasture-Rangeland-Forage
“What are El Nino and La Nina?” National Oceanic and Atmospheric Administration. https://oceanservice.noaa.gov/facts/ninonina.html