The Pasture, Rangeland, and Forage (PRF) Program was developed by the Risk Management Agency (RMA) to act as a risk management tool for the 588 million acres of pasture and rangeland, and the 61.5 million acres of hayland in the United States. This represents 55 percent of all US land.
PRF is an index-based program which means that losses are determined by the difference between a current index value and a historical index value. RMA uses a rainfall index (RI) that is available in the continental 48 states.
How does PRF work
PRF insures a specific amount of coverage per acre against lack of precipitation in the grid for a specific interval. The grid is roughly 17 miles north-south by 14 miles east-west (to be precise, it is a 0.25 degree square of latitude and longitude) that delineates the PRF coverage. Each grid will have its own historical indices and premium rating. All the land covered in a producer’s operation will fall into one or more grids.
The interval is a specific time period covered by the PRF policy and is a two-month interval. PRF coverage is divided among intervals to spread the coverage across the calendar year. The amount placed in any one interval is the interval percent. The interval percent can be no less than 10% and the maximum is dependent on the county as published by RMA in the actuarial documents. Insured intervals can’t overlap to include the same month. For example, you cannot have coverage in Mar-Apr and Apr-May since April overlaps the two intervals.
Jan-Feb Feb-Mar Mar-Apr Apr-May May-Jun Jun-Jul Jul-Aug Aug-Sep Sep-Oct Oct-Nov Nov-Dec
How much am I insuring
The amount of coverage per acre is based on separate published county base values by RMA for two different intended uses - haying and grazing. A producer chooses to cover that published value for each intended use from 60% to 150%. This is called the productivity factor. If the producer has both haying and grazing land, then the producer can choose to cover them with a different productivity factor.
Once a productivity factor is selected, then a coverage level is selected by the producer. The coverage level is 70%, 75%, 80%, 85%, or 90%. This coverage level indicates where the PRF will start paying an indemnity as well as determining the coverage per acre. A 90% coverage level means that if the current interval’s current rainfall index is below 90% of the historical index, then an indemnity will trigger. A 70% coverage level means that the current interval would have to be below 70% to trigger an indemnity. Consequently, a 90% coverage level costs more than a 70% coverage level. If desired, a producer can pick a different coverage level for each intended use.
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. For RI policies, the current index reflects how much precipitation was received compared to the long-term average for the specific grid and interval.
Once that happens, 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
No, PRF allows maximum flexibility in insuring only the acres you want covered.
Why SCIS for your PRF 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 that producer’s operation and risk tolerance based on the rainfall indices. We want to help you cover your forage and grazing risk with PRF and truly show that service is the difference.
For more information, please look at the links below for RMA information.
Rainfall Index (RI) – The rainfall index policy insures against a single peril, lack of precipitation in an area. It is based on weather data collected and maintained by NOAA’s Climate Prediction Center. The index reflects how much precipitation is received relative to the long-term average for a specified grid and interval.