September 1, 2006
New federal risk management tools targeting pasture, rangeland and forage production will soon be available to help offset losses during drought, agriculture officials announced last month.
The rainfall and vegetation index insurance programs offered by the U.S. Department of Agriculture (USDA) Risk Management Agency and co-developed by Texas Agricultural Experiment Station rangeland researchers will be available through approved insurance providers. The programs will provide livestock producers the option to purchase insurance protection for grazing or hay forage losses.
The announcement was made at the Texas A&M Beef Cattle Short Course in College Station. And according to Texas Farm Bureau's agriculture marketing education director Bryce Myrick, the program was one the organization helped in making a reality.
"We helped in the development of the project with the RMA, and the concept behind it is good," Myrick said.
Just think, a rancher can now insure himself against lack of rains when he needs them, a long-standing problem when it comes to agricultural enterprises in the Lone Star State.
As Myrick explained, the RMA will divide the year into six two-month intervals. Ranchers then choose two of those as the target windows for rain (those months most crucial to his hay or pasture development). If it fails to rain the average allotments during those intervals, the rancher qualifies for payment.
The big unknown now comes in price, Myrick said. "We won't know that for another month or so," he said.
Unfortunately, those wanting to enroll in the new program for next year will have just a few weeks after it opens in order to purchase coverage. The deadline for 2007 coverage is Nov. 30, 2006.
"These new insurance tools will help farmers and ranchers, especially with operations located in drought impacted areas, to improve their risk management capabilities," said Agriculture Secretary Mike Johanns in a prepared statement. "Designed to operate in a variety of range and pasture environments, these products utilize innovative technology to determine when a producer has suffered a loss."
The insurance programs are anticipated to become key risk management tools for the 588 million acres of U.S. pastureland and 61.5 million acres of hay, federal officials said.
The rainfall index program will be tested in 220 counties in Texas, Colorado, Idaho, Pennsylvania, South Carolina and North Dakota. Rainfall indices will be used as a means to measure expected production losses, program officials said.
The vegetation index will be tested in 110 counties in Colorado, Oklahoma, Oregon, Pennsylvania, South Carolina and South Dakota. The program is based on satellite imagery that determines the greenness value of the range, helping analyze range condition as a means to measure expected production losses.
Together, the programs will provide coverage to approximately 160 million of the 640 million acres of grazing land and hay land in the U.S.
"These products were designed to allow maximum flexibility for the producer," said Wayne Hamilton, Experiment Station rangeland scientist.
"Producers are not required to insure all acres, but cannot exceed the total number of grazing or haying acres they operate. This allows the producer to insure only those acres that are important to their grazing or hay program," Hamilton said.
"Producers can access the program online and evaluate various rates and productivity factors and performance from previous years, which will give them an idea of the level of indemnity and returns from their insurance investments," said Dr. Richard Conner, Experiment Station rangeland economist.
"Each producer will be asked to make several choices when insuring grazing land or hay land production, including coverage level, index intervals, productivity factor and number of acres. Producers will work with crop insurance agents to view the map and index grids for their area and assign acreage to one or more grids based on the location and use of the insured acreage."
More information on the new program can be found at www.rma.usda.gov/policies/pasturerangeforage.