How Annual Forage Insurance Can Stop You From Worrying About Drought

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23 May 2022, Texas: The Rainfall Index – Annual Forage (RI-AF) Insurance program allows livestock and hay producers to purchase an insurance policy designed to provide coverage against the lack of precipitation on acreage planted annually to forage, used for grazing or as hay for livestock.

RI-AF is currently offered in Texas, Oklahoma, New Mexico, Colorado, Kansas, Nebraska, South Dakota and North Dakota.

Also Read: Measures taken to protect winter wheat harvest

While similar in design to the Rainfall Index Pasture Range and Forage (RI-PRF) Insurance, based off of the rainfall index data provided by the National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center (CPC), the difference lies in the type of commodity covered. The insured crop under RI-AF is ALL annually planted acres grown for forage or fodder with the intended use including, but not limited to grazing, haying, green chop or silage, which includes commodities such as, but not limited to, wheat, triticale, oats, Sudan haygrazer, etc. In contrast, RI-PRF encompasses perennial grasses, rangeland, and hay types such as alfalfa that are not planted on an annual basis.

How does it work?

A producer would have to sign up by July 15, 2022 to be eligible to participate. There are four (4) different growing seasons (Insurance periods) which are determined by dates the acres were planted. Producers are able to divide their liability into two-month index intervals targeting when precipitation is important for the crop being planted. Each grid covers an area equal to 0.25 degrees in latitude by 0.25 degrees in longitude. NOAA creates the grids, which do not follow state, county or national boundaries. Each grid is individually rated based on the data for that grid. The program is designed to insure against a decline in an index value that is based on the long-term historical average precipitation for the same area for the same period. 

Dual use option

RI-AF does offer a Dual Use Option allowing a small grains producer to insure under Annual Forage for grazing in the winter/early spring and then insure their grain crop with a separate MPCI policy and would be eligible to maintain both benefits. The “Dual Use” coverage option is available in counties where grain/grazing is considered a good farming practice and is available for select counties in Texas, Oklahoma, Kansas, Nebraska, New Mexico and Colorado. The dual use option is only available for Growing Season One and primarily used for wheat, some counties may include barley and oats. Your agent should check the Annual Forage and small grains special provisions of insurance.

Indemnity payments

After the two-month interval ends, the United States Department of Agriculture’s (USDA) Risk Management Agency (RMA) will release a Final Grid Index value representing how much precipitation was recorded for the Grid to compare against the producer selected coverage level. There is no loss adjustment. If there is a loss, the indemnity is automatically calculated and then paid. The Annual Forage program has been a very good risk management tool for producers, especially in the last few years during times of drought.

Take control of your risk and gain greater peace of mind

Your FBN Insurance agent can tailor an Annual Forage insurance policy to meet the specific needs of your operation. Learn more about this program or connect with an agent by visiting the Annual Forage page or calling 877-204-4645.

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