Forage producers have gone in the last few years from no insurance options to several.
Producers who lose a significant share of their forage but have not paid for either of the newer insurance alternatives are eligible for the Livestock Forage Disaster Program. It was in the 2008 Farm Bill, ran out of money in October 2011, and was reauthorized retroactively in the 2014 Farm Bill. Eligibility is determined based on how long the farmer’s county was in a drought as determined by USDA’s weekly “Drought Monitor,” and how severe the conditions were. The payments are determined by a fixed payment rate for each year; for instance, for 2014 they’re $52.56 per head of breeding stock and $39.42 for calves.
But there are two additional programs. The Noninsured Crop Disaster Assistance Program is available to growers of many crops, including forage. At the Arkansas Forage and Grassland Council’s Fall Conference in Conway, JJ Jones, southeast area ag economist for the Oklahoma State University Extension Service, explained how the program works. Producers become eligible for NAP by paying $250 per crop per county – “It doesn’t matter if you have 1-acre or 2,000 acres, it’s $250,” said Jones – to a maximum of $750 per county; after the first three crops, additional crops in that county are covered for free. “If you’re a large producer, NAP insurance as far as a per-acre cost basis is going to be the cheapest one you have,” he said.
The maximum premium for all of a producer’s crops in all counties is $1,875. The fee can be waived if a producer meets the criteria for a limited resource farmer; Jones said, “If you make less than $100,000 a year off your farm and you fall under the poverty level for a household of four – in Oklahoma, that’s $23,000 – your insurance is paid for.”
NAP covers the loss of forage greater than 50 percent of expected production, based on FSA yield and reported acreage histories. Jones said that information is a must; “If you don’t have any numbers they’re going to use averages, probably county averages, and they’re probably not going to use your farm,” he said. Payment is based on 55 percent of average market price for the specific forage. There’s a March 15 signup deadline at your county Farm Service Agency office. Producers had to have purchased insurance to qualify for the above-referenced disaster assistance in the past, but that’s no longer the case.
2015 signup has already concluded for the other insurance program available to forage growers, which is known as Pasture, Rangeland, Forage (PRF) Crop Insurance and is offered through private insurers and USDA’s Risk Management Agency. The deadline is November the previous year. PRF claims are determined with the Rainfall Index; it uses data from NOAA’s Climate Prediction Center, which has mapped out the country in grids of roughly 5 square miles. When the producer determines in which grid his hayfield or pasture is based, he determines which 2-month index intervals (January-February, March-April, etc.) he wants to base coverage on. Finally, he selects the value of coverage, a figure between 60-150 percent, and how to divide his insurable acreage between the selected 2-month index intervals. No one interval can have more than 60 percent of the total insurable acres. There is a grid locator and links to decision making tools at the website http://maps.agforceusa.com/prf/ri.
Stacy Hambelton, ag business specialist at the University of Missouri Extension Ozark County office, said producers have a choice of coverage levels. “There will be an average that is calculated, and then you buy coverage at 70 percent of that normal up to 90 percent, and the premiums vary depending upon the amount of insurance that you have,” he told Ozarks Farm & Neighbor. There’s also a productivity factor; he noted, “If you were growing alfalfa, you would find significantly more dollars involved in it than you would in typical fescue in the area, so you may want to run up that production factor depending upon the value of the crop.”
When rainfall totals fall below your level of coverage, you get a check. However, Hambelton said he’d heard from very few producers about it, even after the 2012 drought. In addition to lack of knowledge about the policy, he cited its cost. “I’ve run some local numbers, and depending upon which month it was we could look at $20-40 premium per acre,” he said. The most likely producers to sign up, he believes, are those who are carrying a heavy debt load and don’t believe they could absorb a loss.
