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Agriculture

Pasture, Rangeland Forage RI: An Insurance for IL Livestock Producers

2024-11-22

The Pasture, Rangeland, and Forage Rainfall Index (PRF-RI) stands as a significant crop insurance offering that has been somewhat overlooked by Illinois livestock and forage producers. With only 6% of eligible acres insured in 2024, it presents a valuable opportunity for those in the Midwest. This index insurance is heavily subsidized, offering a potential return of $1.29 for every $1 in producer-paid premium over time.

Unlock the Potential of PRF-RI for Illinois Livestock Producers

PRF-RI Use in Illinois

Since 2016, PRF-RI has been available as a risk management tool for Illinois producers. According to the 2022 USDA Agricultural Census, the state has a substantial amount of pasture and hay production land. Roughly 742,000 acres are dedicated to pasture, and 473,000 acres are harvested for hay. However, in 2024, only about 70,000 acres were enrolled in PRF-RI, indicating that less than 6% of eligible forage land is taking advantage of this subsidized program. As shown in Figure 1, this participation rate is notably lower than in states west of the Mississippi River.Only around half of Illinois counties have any forage acreage enrolled in PRF-RI, as depicted in Figure 2. The top five counties with the highest enrollment rates include Hamilton (27%) and Jefferson (24%) in southern Illinois, Kendall (27%) and Grundy (23%) in northeast Illinois, and Hancock (20%) in western Illinois.Figure 3 reveals the total acreage enrolled in PRF-RI by coverage level in Illinois. The 85% and 90% coverage levels are the most popular, with the 90% coverage level experiencing the largest growth in acreage. Of the 70,000 acres enrolled in 2024, 74% were at the 90% coverage level.

How PRF-RI Works

PRF-RI is designed to safeguard livestock and forage producers against below-average rainfall that can reduce forage production. It covers perennial pasture, rangeland, and forage but not annual forage. This index insurance operates based on a grid system, where each policy is tied to a specific 0.25° latitude by 0.25° longitude grid (approximately 17 miles by 13 miles in Illinois). Rainfall index values are calculated using a weighted average of nearby National Oceanic and Atmospheric Administration (NOAA) weather stations and are compared to historical average rainfall in that grid.Producers have several decisions to make when participating in PRF-RI. They must choose the number of acres to insure, whether it's for haying or grazing (with different premium costs and potential indemnity payments). If choosing hay production, they also need to specify if the acreage is irrigated or Certified/Transitional Organic. The coverage level determines when an indemnity payment is triggered, with options ranging from 70% to 90%. Higher coverage levels come with higher premium costs and different subsidy levels. Producers can adjust the covered value of their forage by setting a productivity factor between 60% and 150%, which adjusts the coverage level relative to the county base value.For example, if the county base value is $100 per acre, a 90% coverage level and a 125% productivity factor would result in a protection amount of $112.50 per acre. Additionally, producers must choose two-month intervals for insurance against low rainfall, and the percentages of value placed in each interval must sum to 100. This helps minimize risk by reflecting the importance of different month intervals for forage production.

PRF-RI Performance

Figure 4 showcases the producer gain ratio over premium for PRF-RI from 2016 to 2023 in Illinois and the total U.S. The producer gain ratio is calculated by dividing total indemnities by total producer-paid premium. An average ratio of one means producers receive the same in indemnities as they pay in premiums. In Illinois, producers received $1.29 in indemnities for every $1 spent on premiums, which is lower than the U.S. average of $2.18. However, it's important to note that the ratio varies from year to year. In fewer than half of the years, Illinois producers paid more in premiums than they received in indemnities.

Summary and Further Information

PRF-RI insurance is a subsidized product with potential benefits for Illinois livestock and forage producers. It provides a chosen level of protection against precipitation loss. While it's not a standalone risk management strategy, it should be used in conjunction with other practices like forage diversification and improved grazing management.PRF-RI insurance can be purchased through authorized crop insurance agents. The enrollment deadline is December 1 of the prior year, and the premium payment deadline is September 1 of the following year, so premiums don't need to be paid upfront. The USDA Risk Management Agency offers more information and an interactive decision tool for exploring grids, policy options, and historical rainfall indices.Pasture, Rangeland, and Forage Rainfall Index Insurance: An Insurance Product for Illinois Livestock and Forage Producers was originally published by Farmdoc.

As of Nov. 17, the USDA Crop Progress report provides valuable insights into the winter wheat planting and emergence status of the country's top 18 growing states. Let's take a closer look at each state and its agricultural progress.

Uncover the Winter Wheat Story Across the Nation

Washington

Washington stands out as the state with the longest winter wheat planting duration among the top 18. Farmers completed the planting by the week ending Oct. 27, a full 4% ahead of the five-year average. Moreover, 100% of the winter wheat has now completely emerged, showing an increase of 1 percentage point from the previous week and being 7 percentage points ahead of the average. USDA rated the state's winter wheat as 2% very poor, 8% poor, 37% fair, 42% good, and 11% excellent.

The early completion of planting and the good emergence progress highlight Washington's agricultural prowess in winter wheat cultivation. This sets a positive tone for the state's agricultural sector and indicates a promising harvest ahead.

Nebraska

Nebraska farmers managed to get their entire winter wheat in the ground by the week ending Nov. 3, which was in line with the five-year average. As of Nov. 17, 91% of the crop had emerged, with only a 1-percentage-point increase from the previous week. However, winter wheat emergence in Nebraska is still behind the five-year average of 99%. USDA rated Nebraska's winter wheat at 7% very poor, 20% poor, 39% fair, 28% good, and 6% excellent.

The state's relatively stable planting progress but slightly behind emergence indicates that there is still room for improvement. Nebraska's farmers will need to focus on ensuring optimal conditions for the remaining wheat to catch up with the average and achieve a successful harvest.

Idaho

Idaho completed its winter wheat planting by the week ending Nov. 10, on track with the five-year average. With planting wrapped up, emergence reached 95% by Nov. 17, just shy of the five-year average of 96%. Only 1% of Idaho's winter wheat was rated less than fair, with the overall rating being 0% very poor, 1% poor, 52% fair, 41% good, and 6% excellent.

The smooth planting and near-average emergence in Idaho showcase the state's efficient agricultural operations. The relatively high percentage of fair and good-rated wheat indicates a healthy crop with potential for a good yield.

South Dakota

Winter wheat planting in South Dakota was completed by the week ending Nov. 10, on par with the five-year average. By Nov. 17, emergence of the crop reached 83%, an increase of 8 percentage points from the previous week. Despite this progress, it is still 11 percentage points behind the five-year average. USDA rated South Dakota's winter wheat as 4% very poor, 27% poor, 43% fair, 22% good, and 4% excellent.

The state's on-time planting and the significant increase in emergence show that South Dakota is making good progress. However, the gap in emergence compared to the average indicates that there are areas where farmers can focus on improving soil conditions and other factors to enhance wheat growth.

Michigan

Michigan also achieved 100% winter wheat planting by the week ending Nov. 10, which was 8 percentage points ahead of the five-year average for the state. Wheat emergence reached 96% as of Nov. 17, 4 percentage points higher than the previous week. Emergence is actually 8 percentage points ahead of the five-year average. USDA rated the state's crop as 0% very poor, 1% poor, 25% fair, 57% good, and 17% excellent.

Michigan's early and successful planting, along with the excellent emergence progress, bodes well for the state's winter wheat production. The high percentage of good-rated wheat suggests that the crop is in good shape and has the potential for a fruitful harvest.

Montana

Winter wheat planting in Montana reached 100% by the week ending Nov. 17, an increase of 1 percentage point from the previous week and 1 percentage point ahead of the five-year average. Emergence hit 91%, with a 5-percentage-point increase from the previous week and being 3 percentage points ahead of the average. USDA rated Montana's winter wheat at 6% very poor, 9% poor, 50% fair, 35% good, and 0% excellent. It is the only one of the top 18 states with no excellent-rated crop.

Montana's successful planting and the notable increase in emergence demonstrate the state's agricultural capabilities. The relatively high percentage of fair and good-rated wheat indicates that the crop is in decent condition, although the absence of excellent-rated wheat presents a challenge that farmers will need to address.

Ohio

In Ohio, winter wheat planting reached 100% by the week ending Nov. 17, an increase of 1 percentage point from the previous week and ahead of the five-year average of 99%. Emergence reached 94% by Nov. 17, an increase of 8 percentage points from the previous week, putting the state 2 percentage points ahead of the average. USDA rated Ohio's winter wheat as 1% very poor, 4% poor, 36% fair, 47% good, and 12% excellent.

Ohio's timely planting and the significant improvement in emergence highlight the state's agricultural efficiency. The balanced rating of the wheat crop suggests that there are areas of strength and areas that need further attention to ensure a high-quality harvest.

Oregon

Oregon's winter wheat planting wrapped up on Nov. 17, just ahead of the five-year average of 98%. Emergence hit 88% by Nov. 17, with a remarkable 16-percentage-point increase in the week and far exceeding the five-year average of 74%. The state's crop was rated 2% very poor, 8% poor, 30% fair, 37% good, and 23% excellent.

Oregon's early completion of planting and the substantial increase in emergence showcase the state's agricultural success. The high percentage of good-rated wheat indicates that the crop is in excellent condition and has the potential for a bountiful harvest.