USDA’s Farm Service Agency (FSA) offers risk management products to livestock producers under the Noninsured Assistance Program (NAP). For example, NAP allows producers to insure all of their pasture acres that are administered by one FSA office for $250. In 2010, producers in Carroll County, Arkansas, received $15 an acre under their policies because of the late spring freeze and fall drought. In 2011, producers with grazing policies administered by that office received $26.11 per acre to help compensate for losses from extreme heat and drought. Carroll County FSA grazing policyholders also received an additional payment in 2011 based on their livestock inventories under the Livestock Forage Program when the drought monitor was tripped last September because they satisfied linkage requirements imposed by the 2008 Farm Bill.
NAP policies provide multi-peril (flood, fire, drought, etc.) risk insurance on losses in excess of 50 percent at 55 percent of the established market price. The market price for grazed forage is established on an animal unit day (AUD) basis which is the daily net energy maintenance requirement at an expected stocking rate. AUD value is the dollar value of a daily energy requirement equivalent to 15.7 pounds of corn using a five-year national average market price. The AUD is multiplied by the number of days in the grazing season and the loss percentage. For those producers who do not separately insure their hay crop, the grazing loss percentages are established by forage specialists on a county-wide basis.
Carroll County FSA Director Scott Fancher stated that in his opinion, “it is always preferable to have rain and good grass, but in years like the last two, NAP was a godsend for those who had it.” He continued, “While the payments didn’t make our policyholders whole, they certainly took some of the sting out of our high feed and hay prices this fall and winter. Folks had to sell lots of cattle around here due to the drought, but they would have had to sell a lot more without the NAP money to buy feed with.” Fancher explained that NAP participation is limited to persons with average adjusted gross non-farm income of $500,000 or less and that the $250 administrative fee could be waived for limited resource farmers and ranchers. “I hope more people will take advantage of the inexpensive grazing insurance next year,” he said. “I don’t see any reason not to expect 2012 to be another dry year.”
Producers can get more information on closing dates for grazing and other NAP policies from their local FSA Offices.
