Farmers and ranchers are running out of time to sign up for USDA’s Pasture Rangeland and Forage (PRF) Insurance for 2019 as the Nov. 19 deadline approaches.

PRF coverage provides protection to producers when there is a lack of rainfall. It is a bit different than traditional crop insurance as it doesn’t actually insure against crop loss. Brandon Willis, owner of Ranchers Insurance in Laketown, UT, explained some aspects of the program to WLJ.

Willis has unique insight into the program, having worked in several capacities in Washington, D.C., including as a staff member for Sen. Max Bacus (D-UT), where he was charged with drafting the language for the PRF program.

Mild weather predicted for much of U.S.

Later, he served as the deputy administrator for farm programs at the USDA’s Farm Service Agency (FSA), and also served four years as the administrator of USDA’s Risk Management Agency (RMA), overseeing the federal crop insurance program.

With the deadline to sign up for crop year 2019 approaching, Willis told WLJ that signing up is not difficult, but it does take some time. “Although administered by USDA, producers wanting to buy insurance need to contact a local insurance agent. He noted USDA sets the rules, and has contracts with 15 private companies. Willis said, “Those companies in turn work with agents like me. The agent is the face-to-face contact for a rancher on this program, but they work through the USDA-approved companies.” Producers can find a list of agents through the RMA website (rma.usda.gov) using the “agent locator” link.

The program was started a number of years ago and is still considered a “pilot” program. However, Willis noted it is well established with participation growing every year. He said nationwide there are over 99 million acres enrolled.

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Insurance against drought - Nationwide PRF Acres - chart

Nationwide PRF participation in the program has grown every year, reaching close to 99 million acres in 2018. 

Different from other insurance, Willis explained, “You are insuring against the historical precipitation.” He provided an example, “Say that for June and July, the area you are in is supposed to receive 2 inches of precipitation. You can insure 90 percent of that, so you can insure 1.8 inches of precipitation. If it falls below 1.8, you are going to get paid as if …you are really saying that you are insuring 90 percent of the forage production, instead of 90 percent of the precipitation.” He went on, “They just correlate forage to precipitation, so they aren’t actually looking at your fields or at your rangeland to determine if payment is made. It is just based upon that weather data.”

The weather data used is from the National Oceanic and Atmospheric Administration (NOAA). Willis said NOAA has weather data from across the United States broken into grids of approximately 17 x 17 miles. Within those grids weather data is collected from between four and 10 of the closest weather stations.”

Willis reiterated that the insurance is based 100 percent on precipitation. “They don’t look at what happens on your actual plot of land, but obviously they are highly correlated.”

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Insurance against drought - U.S. Premiums / Indemnities - chart

PRF Insurance participation has increased every year since it was implemented. This chart shows premiums and indemnity payments for 2007-2016. 

Producers can insure their land for an entire year or in two-month intervals, and must insure at least four months. Willis explained that someone could chose to insure April-May, for instance, since in some areas that is when the most moisture occurs. He provided an example saying, “If you have $1,000 of liability you could decide if you want to spread that evenly over the whole year, which would be 17 percent in each interval, essentially, or if you want to put 50 percent in one interval and 50 in the other. If you say, ‘Hey, I need to have April and May insured because that’s when the grass grows, due to moisture, you can put a lot of your liability in those two months. So, you are really waiting to see how the moisture works for just those two months. It’s a little complicated to explain, but that’s how it works.”

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Insurance against drought

Pasture, Rangeland and Forage Insurance protects against lack of rainfall. The deadline to sign up for 2019 is Nov. 15. 

Another thing that is different from many traditional insurance products is that premiums are not due when a producer signs up for the program. Willis said, “One thing that is really nice and consistent with other USDA insurance programs is you don’t have to pay the premium until the subsequent year. So, you sign up now for 2019, the premium is not due until September of 2019. Often times people have received enough indemnities that their premium is knocked out and they never even receive a bill.” — Rae Price, WLJ editor

WLJ Editor

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