risk management services. It was the result of 2014 legislation by U.S. Rep. Frank Lucas of western Oklahoma, an area that’s seen more than its share of parched pastures. Tucker said PRF provides Austin Tucker explains how ranchers can insure their pastures against drought through USDA’s pasture, rangeland, forage insurance. HEDGE AGAINST
livestock producers and forage producers with a tool to mitigate drought risk. It differs from crop insurance products for traditional crops.“It’s based on rainfall indexes that are calculated using precipitation measured over two- month intervals and compared to historical data within a specified grid area,” he said.“When the average historical rainfall is less than the guaranteed amount for the insured area, the insured producer is paid an indemnity based on the difference between the two.”
By Larry Stalcup Contributing Editor
NOTHING CAN UNDO THE MISERY caused by continued drought and having to sell productive cows. It has been a too-common practice in 2022. But with the federal pasture, rangeland, forage (PRF) insurance program, producers can hedge against the lack of rainfall and receive government payments to help buy replacements or supplemental feed. That was one message received by ranchers and others who attended the annual School for Successful Ranching presented by the Texas and Southwestern Cattle Raisers Association at its annual convention this spring in Fort Worth. With the Southwest stuck in a disastrous drought, producers have been forced to either thin herds or provide supplemental forage and other feed to maintain them. School sessions touched on ways to improve production and financial efficiency through better grazing management, nutrition, price risk management and other methods of reducing losses. The PRF program was among the risk management tools that caught a lot of interest. Austin Tucker of Specialized Crop Insurance presented the PRF session. His territory covers much of the Southwest. The program was formally called the Rainfall Index for Pasture, Rangeland and Forage (RI-PRF) under the U.S. Department of Agriculture (USDA Risk Management Agency’s catalog of
August-September, September- October, October-November and November-December.
La Niña Nightmare PRF is helping producers wake up from the drought nightmare caused by the La Niña weather pattern. La Niña has kept the Southwest dry and the Midwest wet. It was forecast nearly a year ago, based on data from the National Oceanic Atmospheric Administration (NOAA). The forecast was accurate. More than half of Texas was under extreme drought as late as mid-May. Had the region’s ranchers used PRF insurance to cover deficit precipitation, they could likely have collected an indemnity. PRF coverage is based on grids set by NOAA. Each grid is 0.25 degrees in latitude by 0.25 degrees in longitude at the equator, which equals about 12 by 12 miles in the U.S. PRF policies are based on two-month periods or index intervals: January-February, February-March, March-April, April- May, May-June, June-July, July-August,
Policyholders must select at least two, two-month periods. They have the option to buy up to six. Selection is typically based on when precipitation is most important to an operation. To help reduce costs of the coverage, USDA will pay 51 percent or more of the premium. Insurance payments are determined by using NOAA data for the grids and index intervals covered by a policy. Thousands of individual weather stations provide grid precipitation data. When the final grid index falls below their “trigger grid index,” Tucker said the policyholder may receive an indemnity automatically. Payment typically takes 45 to 60 days after the interval. “There is no claim or production to turn in. Coverage is based on the experience of the entire grid,” he said. “It’s not based on individual farms, ranches or specific weather stations in the general area. Everything is based off of the NOAA data, not your rainfall or production.”
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