The Annual Forage (AF) policy was introduced as a pilot by RMA in 2014. AF covers annually planted crops that are used for grazing, haying, green chop, or silage. It does not cover perennial crops such as grass or alfalfa. The policy is an index-based policy that uses a rainfall index (RI) based on the same grids as PRF.
The initial pilot covered the states of Texas, Oklahoma, Kansas, Nebraska, South Dakota, and North Dakota. In 2016, RMA added Colorado to the pilot. New Mexico was added in 2017.
How does AF work
AF insures a specific amount of coverage per acre against lack of precipitation for a specific interval in a growing season. The grid is roughly 17 miles north-south and 14 miles east-west (to be precise, it is a 0.25 degree square of latitude and longitude) that delineates the AF coverage. Each grid will have its own historical indices and and premium rating. All the land covered in a producer’s operation will fall into one or more grids.
AF divides the year up into two growing seasons. In each growing season, there are two-month intervals that are the basis for determining a loss. Growing season 1 consists of the following intervals: Sep-Oct, Oct-Nov, Nov-Dec, Dec-Jan, Jan-Feb, and Feb-Mar. Growing season 2 consists of the following intervals: Mar-Apr, Apr-May, May-Jun, Jun-Jul, Jul-Aug, and Aug-Sep.
Coverage is divided among the intervals for each season and is called the interval percent. The minimum interval percent that can be assigned is 10% and the maximum is dependent on your location (40%, 45%, or 50%). Intervals cannot have overlapping months assigned. However, months can overlap if in different growing seasons. For example, a producer can have growing season 1 coverage in Feb-Mar and growing season 2 coverage in Mar-Apr.
When are sales closing and acreage reporting dates
Sales closing for growing season 1 is July 15 of the preceding year. For example, applications for 2017 AF policies for growing season 1 must be signed by July 15, 2016. Sales closing for growing season 2 is December 15 of the preceding year. For example, applications for 2017 AF policies for growing season 2 must be signed by December 15, 2016.
Acreage reporting for growing season 1 is December 15 (November 15 in NE, ND, and SD) with growing season 2 being July 15 (all states).
How much am I insuring
The amount of coverage per acre is based on the published county base value by RMA. The county base value does not differ for irrigation practice, crop, or intended use. Your exact coverage per acre is dependent on the productivity factor and the coverage level.
The productivity factor ranges from 60% to 150% and allows the producer to tailor the county base value to their operation. The coverage level is 70%, 75%, 80%, 85%, or 90%. The coverage level not only is part of calculating the coverage per acre but also determines when a loss would be triggered. A 90% coverage level would mean that a loss would be triggered when the current interval’s rainfall is below 90% of the historical index. A 70% coverage level would mean that loss would not trigger until the rainfall is below 70% of the historical index.
Coverage Per Acre = County Base Value x Productivity Factor x Coverage Level
How is a loss calculated
Each interval stands on its own when calculating a loss. A loss is triggered by an interval having a rainfall current index below the specified coverage level. This current index is based on the rainfall received in the interval compared to the long-term average for the specific grid and interval.
Once triggered, the loss is calculated as follows:
Indemnity = [(Coverage Level - Current Index) / Coverage Level] x Coverage Per Acre x Interval Percent
Does all my ground have to be insured
You must insure all the annual forage acres in the county under the AF policy. AF differs from PRF in this respect. The policy level is based on the county, so you could choose to have AF in one county and not another.
Can I have AF and regular (MPCI) crop insurance
AF and MPCI policies can be carried at the same time. For example, you can have a grain sorghum policy to cover grain sorghum and AF to cover sorghum silage. You cannot insure the same crop under both policies in the same year, but you can carry both policies and make the appropriate decision at acreage reporting time as which policy covers which crop.
Can I have AF and NAP
You can have AF and NAP coverage in place at the same time. However, you cannot collect on both policies for the same crop. You would have to make the choice on which indemnity to receive if both triggered a payment.
Why SCIS for your AF coverage
Our specialty is RI coverage. Over the years, we have developed tools that enable each producer to look at individual grids and determine the specific intervals and interval percents that work best for each producer’s operation and risk tolerance based on the rainfall indices. Our ability to accurately estimate AF indemnity payments at the immediate end of each interval is key in making AF work for you. We can to help you cover your annual forage risks with AF and truly show that service is the difference.
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