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Frequently Asked Questions

Pasture, Rangeland, Forage

Aug 31, 2015

The Rainfall Index (RI) Pasture, Rangeland, Forage (PRF) insurance program is designed to provide coverage on your pasture, rangeland, or forage acres. This innovative program is based on a precipitation index. The program is designed to give you the ability to cover replacement feed costs when a loss of forage for grazing or harvested for hay is experienced due to lack of precipitation.

Q: What is the Pasture, Rangeland, and Forage Insurance Policy?
A: The PRF policy is an area-based insurance plan that covers perennial pasture, rangeland, or forage used to feed livestock.

Q: What does “area-based” mean?
A: “Area-based” means payments are not based on an individual rancher’s experience; rather, payments are based on a grid’s deviation from normal experience. For example, under the Rainfall Index, if your ranch received a surplus of rain, but the area in your grid was below average, you could receive a payment or vice versa.

Q: In 2015 I had a Vegetation Index (VI) PRF policy, what is the difference between the Rainfall Index and the Vegetation Index?
A: The Rainfall Index program insures the single peril of lack of precipitation based on National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center (CPC) Daily Precipitation Data. The Vegetation Index program is based on United States Geological Service Earth Resources Observation and Science (EROS) Normalized Difference Vegetation Index (NDVI) data. The Rainfall Index measures an input (precipitation), and the Vegetation Index measured an output (forage growth). Index interval selection differs between the two products. Producers need to select index intervals under the Rainfall Index to correlate with months when precipitation is critical for forage growth. Reviewing the historical indices tool found on the RMA website along with production records is critical to ensure producers select the index intervals that correlate to their past production.

Q: Why was the Vegetation Index (VI) insurance plan removed from PRF?
A: RMA conducted a program evaluation and found that the VI program correlated well to forage production. However, the evaluation outlined a significant lack of understanding of what the VI measured, and how to select time periods that best correlated to the production within a grid. The VI program measured the actual biomass vigor within a grid. The best correlation to actual production was generally at the end of the growing season. Many producers focused on the spring green up as being important. While remote sensing is often referred to as a “greenness” index, remote sensing measures photosynthesis. A dry, warm winter will result in a high level of photosynthesis that does not necessarily translate into lush, green forage. The evaluation indicated the RI program also correlates well to forage production, was well liked, and more easily understood by producers.

Q: What pricing changes were made for 2016 and how will they impact me?
A: After receiving feedback from ranchers that prices for grazing were too low, RMA contracted for a study of the grazing and hay pricing methods. After completing the study, the grazing price has been updated to reflect the stocking rates, available forage, and value of the forage for the area. This method uses Animal Unit Month data for each state and county to determine the “yield” for the grazed acreage and then uses hay prices to determine the current pricing. The 2016 prices were generally increased based on this new method and better reflect the grazing value. The updated pricing methodology will provide a meaningful risk management strategy for covering the cost of alternative feed when available forage for grazing is short or non-existent.

Previously RMA did not distinguish between irrigated and non-irrigated hay. Prior to 2016, RMA only distinguished between grazing and hay. In some states, producers will notice a price for irrigated hay that is significantly lower than non-irrigated hay. The irrigated hay price will reflect the additional cost of irrigation when precipitation is lacking. Normal irrigation expense is not covered. The RI-PRF program triggers when there is a lack of precipitation. Since irrigated producers would not have a loss of production due to lack of precipitation, RMA calculated the extra cost of irrigation (e.g. electric costs) when precipitation was below normal.

RMA also updated the pricing methodology for non-irrigated hay production. As noted above, in some states, RMA offers both irrigated and non-irrigated hay with separate pricing. RMA updated the non-irrigated hay to reflect hay production (yield) and price for non-irrigated hay only. In the past, RMA used the National Agricultural Statistics Service (NASS) All Hay price and yield, which included irrigated hay production and non-irrigated hay production and price within a state. In 2016, RMA will use the NASS hay yield and price that excludes irrigated hay and alfalfa. This means that the higher yield that is associated with the irrigated hay production and contributed to the All Hay price previously used is no longer included. This reduces the overall yield in those states where both irrigated and non-irrigated hay production is common.

Q: In 2016 will RI-PRF be available in my area?
A: RI-PRF is being offered in all 48 contiguous states. This expansion will cover over 650 million haying and grazing acres. All counties within those 48 states will offer RI-PRF. A few producers will not have coverage if the majority of their grid crosses over either the northern or southern United States borders.

Q: How does the Rainfall Index work?
A: Producers must choose at least two, 2-month periods when precipitation is important to their operation. These periods are called index intervals. 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. RMA uses NOAA CPC data to calculate normal precipitation and deviations from normal precipitation. Losses are not based on a single ranch or a specific weather station in a general area. RMA uses NOAA precipitation data based on the Optimal Interpolation methodology. Interpolation is based on the idea that things closer together in space are generally more similar than those farther apart and it estimates precipitation for a grid using reporting stations within a search radius around the grid. More information about the technology and how NOAA CPC interpolates weather data to a specific grid can be found on RMA’s PRF web page. Select “Rainfall Index, Pasture, Rangeland, Forage Technology”. It is important to understand that precipitation is interpolated to the grid, not measured within the grid.

Q: What is a grid? Why is it important?
A: A grid is the physical area under which your operation is insured. You are paid based on the losses interpolated to the grid for the Rainfall Index, which is why it is important that you choose the right grid(s) in which your operation is located. If you have any questions about your grid(s) identification number, or for more information on how grids are measured please contact your crop insurance agent.

Q: How is precipitation measured under the Rainfall Index? When are payments triggered?
A: The Rainfall Index uses NOAA CPC Daily Precipitation Data that interpolates precipitation to the grid. RMA compares the compiled data for each 2-month interval with the historical precipitation data for the same period that is normally expected in the grid. When the interpolated precipitation falls below average for the index interval it triggers a loss payment to all ranchers who have signed up for the program in the grid that are covered under this interval. Producers do not need to submit a loss claim or notify their agents. RMA will calculate any loss and your insurance company will process any indemnity due.

Q: Does it matter which index intervals I choose to insure?
A: Yes, which index intervals you insure and how much you insure for each interval is very important. It is extremely important to review the historical indices tools for your grid along with past production records to determine if these programs will work for your operation and to assess which index intervals correlate well to your production. For example, 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.

RMA strongly encourages you to use our decision support tools to help you make the right decision for your insurance needs. Selecting index intervals is a critical component of these policies and the result of your selections will directly correspond to your satisfaction with the product.

Q: What are these support tools?
A: These tools are the Grid ID Locator, decision support tool, and historical indices tool and are available on RMA’s website for producers to use to view past results with their production records. This comparison will assist in index interval selection and determining how well these products correlate to your historical productions records.

Q: Where do I find out more information on the technology, shares, or how to use the tools?
A: RMA’s website provides several PowerPoints that provide information on the program including a general overview, the technology used for the Rainfall Index, and step-by-step directions on how to use the tools. There is also a PowerPoint outlining who has a “share” in the forage. For grazing, RMA recognizes the livestock producer as having the insurable interest or “share” in the crop. The livestock producer suffers the loss – replacement feed. For haying, RMA recognizes the financial interest in the hay crop similar to other crops. The RI-PRF program does not measure actual production and was designed for livestock producers who do not keep detailed hay records. For commercial grass growers, who maintain detailed forage records and are not interested in RI-PRF, RMA offers an Actual Production History Forage Production policy that may be better suited for them.

Q: How do I find a crop insurance agent?
A: A list of insurance agents is available at all USDA service centers or on the RMA website.

Q: Do I need insurance coverage to participate in USDA programs even though I am a rancher and your insurance plans are not useful to me?
A: No, currently participation in the Federal crop insurance program is not a requirement of any current USDA program.

Q: Are there other livestock plans available if PRF isn’t right for me?
A: Yes, RMA offers seven livestock plans and an annual forage insurance plan. Talk to a crop insurance agent to help you decide the option that is right for your operation.

Contact Information

For more information, contact RMA Public Affairs.