Pasture, Rangeland and Forage Insurance comment period extended
USDA’s Risk Management Agency seeks input on their Pasture, Rangeland and Forage Insurance product.
Comments will be accepted until Dec. 21 on the insurance program that, from 2007 to 2018 paid ranchers $1.95 billion in indemnities and cost ranchers about $1.09 billion in premiums and is subsidized 51 to 59 percent for the most common coverage levels.
The current program allows ranchers to take out insurance policies to protect against periods with low rainfall.
According to USDA, the PRF policy is an area-based insurance plan that covers perennial pasture, rangeland, or forage used to feed livestock. It provides producers a risk management tool to cover the precipitation needed to produce forage for their operation.
Participants in the insurance program choose at least two, 2- month insurance intervals. If their grid area is shown to have lower precipitation than their Coverage Level during any of the two month periods they choose to insure, the producer is paid an indemnity.
Tait Berlier, with Colorado-based AgRisk Advisors, said the program could certainly use some improvements, but he’s concerned about the changes USDA is discussing.
A USDA spokesman confirmed that RMA contracted with an independent third party to review the program. The contractors turned in a report with recommendations, said the spokesperson.
Some of the recommended changes include:
- Adjusting the County Base Value (CBV) productivity range;
- Better targeting of indemnities;
- Focusing PRF on viable forage production areas;
- Focusing coverage on risk-reducing intervals;
- Taking an alternative approach to reducing frequent shallow losses; and
- Modifying the CBV.
In layman’s terms, Berlier explained that the two main recommendations that he fears will actually harm the insurance program are: 1) to lengthen the insurable periods from two months to three or four months; and 2) to lessen or remove insurance options during the winter months.
Berlier points out that, while many cash crops do not rely as heavily on winter precipitation, rangeland quality and production quantity is significantly affected by moisture year-round, not just during the growing season.
“Right now, a producer can insure during the winter. This is important. If he doesn’t get adequate snow cover or moisture in the winter, it affects his operation,” said Berlier.
“The contractor’s idea is that the only moisture that helps forage growth is what is received during the growing season. That is wrong,” he said. “The biggest thing we need to get RMA to understand is that grass as a perennial crop is completely unlike annual crops. You might not have good soil moisture when you plant a crop, but if you get a rain right afterward, you are all right. It’s different with grass.”
Extending the coverage options from the current two month option, to a three or four month interval could make for even less correlation between rainfall measurements and actual on-the-ground impacts. Already, rainfall is measured via an index using the closest National Weather Service Stations that collect precipitation daily. For some producers, this can already be inaccurate for their actual ranch because of the distance some ranches are from weather stations. To increase the recording time frame to three or four months could diminish the usefulness of the insurance product for some. Berlier offers an example: “If a producer right now selects May-June for instance, and his average precipitation is six inches. He could get a single moisture event – a six inch gulleywasher on May 1, that would kick him out of the payment window for May-June even though the other 60 days in that time period were bone dry.”
It’s important for insurance agents to help producers understand these caveats before they make the commitment to purchase the insurance, he said.
But if the intervals were extended to three or four months, a May 1 rainfall could disqualify a producer from a payment in a May-June-July or May-June-July-August payment window.
Berlier said a group of producers, extension representatives and insurance agents formed a working group several months ago to discuss as a group how the program could be improved. He hopes USDA will make connection with his group, to hear more of a “boots on the ground” perspective. He is also pleased that the comment period was extended, and he encourages ranchers to submit comments.
When asked if it was USDA’s goal to decrease, increase or maintain the number of policies issued and/or the premiums paid, the spokesman responded with:
“It’s USDA’s goal to provide effective, market-based risk management tools to strengthen the economic stability of agricultural producers and rural communities. RMA is committed to increasing the availability and effectiveness of Federal crop insurance as a risk management tool.”
Berlier hopes USDA will work closely with livestock producers and their associations in the future. “RMA needs to engage with folks like the Livestock Risk Management – Working Group and state livestock associations to find out what’s going on, on the ground and what individual producers think. Probably the worst part about the recommendations were that few if any came from the livestock industry,” he said.
The USDA spokesman who responded to TSLN’s questions said they are absolutely interested in working with the industry. “Absolutely, yes, RMA already works very closely with the livestock industry and has sought their feedback directly on these contractor and stakeholder recommendations. These groups are encouraged to provide comments to these recommendations.”
Comments can be submitted via email to email@example.com or by mail to Director, Product Administration and Standards Division, Risk Management Agency, United States Department of Agriculture, P.O. Box 419205, Kansas City, MO 64133-6205.
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