by Josh Chetwynd
Agents who offer forage insurance in states such as Texas and Oklahoma may see an increase in business as returns in the cow-calf markets are showing a decline.
University of Nebraska-Lincoln Extension professor Kate Brooks released a paper last week encouraging operators in this market to consider forage insurance as an option based on current general market conditions.
While Brooks stressed that each cattle business needs to “look at their operation and consider elements like rainfall indices and what the cost of their operation” might be, she said that “when prices are low in the cattle markets any risk management like forage insurance is a good idea.”
In her paper, she wrote that there are good reasons at the moment to be prepared.
“Producers need to continue to monitor costs,” Brooks said, “as returns begin to decline compared to 2014.”
There are two forage insurance products available through the USDA – Risk Management Agency. They are the Pasture, Rangeland and Forage (PRF) insurance and the Annual Forage (AF) insurance. Both forms of insurance rely on a rainfall index to calculate losses and set indemnities. Because PRF and AF are risk management tools, producers pay subsidized premiums to participate. Also, these insurance policies are not necessarily available in every state. For instance, AF can only be purchased in Nebraska, North Dakota, South Dakota, Kansas, Oklahoma, Texas and Colorado.
Brooks said that the number of agents who offer forage insurance tends to be small, and they typically deal in crop insurance as well. For those interested in writing in this market, timing is essential, according to Brooks, as policies must be in place by November for the following spring’s forage.
