What is PRF and how does it work?

Have you ever stood in your dry field and said, "I would pay $1,000 for a good inch or two of rain?" Pasture, Rangeland, Forage, or PRF, is a Pilot Insurance program through the USDA that allows Cattlemen and Forage Producers to buy insurance coverage on their pasture, rangeland, and forage acres to protect against lack of rainfall. The program is based solely on precipitation, known as the Rainfall Index. It is designed to protect from lack of rainfall, resulting in increased feed costs, destocking, depopulating, or other actions. For owners of a PRF policy, lack of enough rain in their grid means receiving a check and/or a premium credit from the insurance company. Not enough rain. You get paid. It's that simple.

What determines how much rain is enough? The Rainfall Index is an average of the rainfall in your area based on the data from the National Oceanic and Atmospheric Administration Climate Prediction Center (NOAA CPC). Each grid is 0.25 degrees in latitude by 0.25 degrees in longitude, which translates to approximately 12 x12 miles. As a policyholder, you must select at least two 2-month periods but have the option to buy up to six, based on when precipitation is most important to your operation. These periods are called index intervals. Insurance payments are determined using NOAA CPC data for the grid(s) and index interval(s) the policyholder has chosen to cover. When the final grid index falls below their "trigger grid index," the policyholder may receive an indemnity automatically; there is no claim or production to turn in.

To fully understand the PRF policy, you will need to sit down with an approved crop insurance agent to review your area's Grid ID and index grids. Together, we will assign acreage to one or more grids based on the location and use of the acreage to be insured. You must look at these records with an agent trained to use the historical indices tools for your grid and past production records to determine if this program will work for your operation and which intervals work best for your forage production. Once you have the type of insurance needed for your operation (hay, graze, or both), you will be asked to make several choices when insuring your grazing or hay production, including coverage level, index intervals, irrigated practice, productivity factor, and the number of acres you choose to insure. You are not required to insure all your acres, but you cannot exceed the total number of grazing or haying acres in your operation, including those rented.

The PRF policy is for a single peril, lack of precipitation. Coverage is based on the experience of the entire grid. It is not based on individual farms, ranches, or specific weather stations in the general area. Everything is based on the NOAA data, not your rainfall or production.

PRF policies are sold only once a year. If you are interested in this type of insurance for the 2024 crop year, you will need to have purchased the policy before 12/01/ 2024. After the sales closing date, it is too late to purchase this policy, and you will have to sit out another year.

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