If you depend on hay or pasture to feed livestock, now’s a good time to check out a program called the Rainfall Index (RI) Pasture, Rangeland, Forage (PRF) insurance program.
“If you make any significant business decisions based on livestock grazing practices, I would consider it,” advises Ray Massey, Extension Professor of agricultural and applied economics at University of Missouri, Columbia, Mo.
The program, subsidized by the U.S. government, is a risk-management tool designed to help farmers cover replacement feed costs when they experience a loss of forage or hay due to a lack of precipitation. In essence, it’s insurance that provides financial protection for inadequate rainfall.
How It Works
You must select at least two, two-month periods when precipitation is important for forage growth on your farm. You also need to decide the amount of insurance you want.
“Do you want to insure 70%, 80%, 90% of your expected rainfall? What months do you want to cover? Normally, you would choose those months when you’re actually going to have cattle out there or hay that you’re needing to harvest,” Massey explains.
The USDA Risk Management Agency (RMA) then uses National Oceanic and Atmospheric Administration Climate Prediction Center data to determine whether you receive adequate rainfall during the two-month periods you selected. You won’t ever talk to an insurance adjuster or have one on your farm or need to consult your rain gauge.
“If you get below whatever you insured, they’re going to send you a premium,” Massey says. “If you are not below the percent you insured, then you’re not going to get a premium.”
What months you decide to insure is critical, and they may not be the ones you would initially think would be best. USDA-RMA offers this example for reference: A rancher has an operation in Virginia and has cool season grasses. July and August are normally extremely dry months when the vegetation normally becomes dormant (turns brown). Since July and August are normally dry, this may not be a good period to insure. This Virginia rancher may be better served by insuring months earlier in the spring that are important for cool season forage growth and months in the fall that would establish his cool season grasses for fall grazing.
The USDA-RMA provides some decision support tools to help you make the best decisions for months to consider for insurance purposes. In addition, here is a link to frequently asked questions (FAQs) about the insurance program and USDA-RMA’s responses: https://bit.ly/3mEnFrn
Massey says farmers have until December 15 to purchase PRF insurance. “So, you’re going to be needing to make that decision here in the next month,” he says.
You can hear Massey’s complete recommendations in this AgriTalk segment, which aired on Monday:
