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Pasture and Forage Insurance Benefits Farmers


Want pasture and forage insurance? Time is running out. In a recent webinar, experts outlined the Pasture, Rangeland, and Forage (PRF) Rainfall Index crop insurance program that can help farmers make up for drought-related losses, but only if they sign up before Nov. 15.

Speakers included Cornell Cooperative Extension agricultural educator Keith Severson; Tom Smiarowski with University of Massachusetts Extension; Paul Russell with University of Rhode Island Extension; and Leon Ripley, farmer and owner of Maple Corner Farm, Granville, Massachusetts.

Erin Roche of University of Maine Cooperative Extension moderated the webinar. She explained that PRF insurance covers farmland based upon the rainfall received in a 17-by-12-mile grid.

“Loss payments are not based on single farm’s experience, but based upon the grid’s average,” Roche said.

While that may seem unfair, it does eliminate a lot of administrative headache, as farmers don’t have to file paperwork, meet with an adjuster or prove their losses. The program automatically generates checks for eligible farmers, basing the loss on satellite data.

PRF provides single peril coverage for lack of precipitation, not pests or other events that affect the crop.

While incurring yet another expense — insurance premiums — seems an undue burden on farmers, Roche said that it can spare farmers other expenses in dry years.

“Buying off-farm feed can be very costly. PRF can offset these expenses,” she said.

Farmers must select hay or grazing for a particular plot, but not both; however, they can divide their land between the designations.

Roche also said that farmers must choose which months to insure, with a minimum of two, two-month intervals such as April-May or June-July.

“The farmer decides what percent of the historical average precipitation to insure,” Roche said.

That coverage level can range between 70 and 90 percent of the historical average precipitation for a grid. The farmer also chooses the productivity factor from 60 to 150 percent as a way to put a lower or higher value on the hay or grazing acres.

“The farmer’s premium will be influenced by the coverage level and productivity factor,” Roche said. “Premiums are significantly subsidized.”

In addition to filing before the Nov. 15 deadline, farmers must complete the AD-1026 Conservation Compliance form with FSA to receive a premium subsidy. Without it, they would have to cover the entire cost of the premium.

The program is available to farmers in the continental U.S.

“We encourage folks to contact a crop insurance agent sooner than later,” Roche said.

She also reminded farmers that it’s possible to receive a loss payment without an actual crop loss or to suffer a crop loss and receive no payment since the policy is not based upon individual rainfall or yields but on average rainfall for the grid area.

During the webinar, Smiarowski presented a recorded interview with Ripley, who operates a family farm that produces hay, maple syrup, and blueberries. Since 120 acres of his land is planted to hay — an important crop for his operation — and he’s also expanding his beef operation, now at 13 head, PRF has become an important part of his farm’s planning.

Last year, Ripley raised 1,200 square bales of hay he markets to the horse, sheep and alpaca industries.

For the past three years, Ripley has purchased PRF coverage.

“I felt it was another way to cover potential risk and our assets,” Ripley said. “The program outlined for us was very good. It gave us choices. You don’t have to put all your acres in and you can pick the months.”

He insured three-quarters of his acres each year. With droughts in 2016 and 2017, he received back a 6 to 1 ratio benefit for every dollar he invested in premiums. But for 2018, he anticipates not receiving back anything.

Ripley said that his insurance agent helped him decide what two-month intervals would likely represent the best months to cover to provide the most benefit.

He paid an average cost per acre of $23 in premiums.

“You’re harvesting a fair amount of hay per acre, so that’s a pretty low cost for protection,” he said.

Ripley takes the 85 percent coverage level at 150 percent of the price.

“In the first two years, we had good luck with it,” Ripley said. “We had two very dry periods in the first year and part of one period was quite dry in the second year. The other wasn’t quite as dry.”

Farmers don’t have to file any paperwork, since the payments they receive are automatically triggered by precipitation levels for their coverage period within their geographic area.

“The policies have been very good to us,” Ripley said. “If you’ve got a fairly large haying and pasture operation, look into getting a policy.”

Paul Russell said that premiums are due at the end of the following growing season on Sept. 30. Farmers also pay a $30 fee when signing up.

“If you receive an indemnity payment, the premium is deducted from it,” Russell said.

Severson reviewed a PRF decision support tool found at www.prodwebnlb.rma.usda.gov/apps/prf.

Operators can select the index interval, percent of value, intended use, irrigation practice, coverage level, productivity factor, insurable interest and insured acres, and then enter the sample year.

He entered the data from Riley’s farm last year, and said that the policy cost $43. USDA paid $23 of the policy. Riley received $12,245.

“That was a pretty good investment that year that covered some of his losses,” Severson said. “If you reduce productivity, you won’t realize as large of an indemnity if you suffer a loss.”

He also said that organic transitional or organic certified may be selected for haying but not grazing.

Sponsors of the free webinar include University of Maine Cooperative Extension, University of Massachusetts Extension, University of Rhode Island Cooperative Extension, and Cornell University Cooperative Extension with funding from the USDA Risk Management Agency.

Source: Deborah Jeanne Sergeant, Lancaster Farming

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