Alyssa Lane
Pasture, Rangeland, Forage (PRF) Insurance is a federal area-based program that helps protect a producer's operation from forage loss risks due to a lack of precipitation. PRF insurance is available in the 48 contiguous states and is designed to provide coverage for pasture, rangeland, or forage acres grown for the intended use of grazing by livestock or haying. It is important to consider whether PRF insurance is worth it by weighing the benefits and understanding how it can help when there is a lack of rainfall.
| Characteristics | Values |
|---|---|
| Type of insurance | Area-based insurance program |
| Purpose | To protect a producer's operation from forage loss risks due to lack of precipitation on acres grown with the intended use of grazing or haying |
| Who is it for? | Cattle producers who raise feed crops (pasture, alfalfa and other forage crops) |
| What does it cover? | Perennial forages and grazing land used to feed livestock |
| What is it based on? | Direct correlation between below-average rainfall and decreased forage production |
| How is it calculated? | Using NOAA CPC data for the grid(s) and the chosen index interval(s) |
| How often is it calculated? | In two-month intervals throughout the year |
| What is the indemnity payment? | When the final grid index falls below the policyholder’s “trigger grid index”, the producer may receive an indemnity |
| Who decides the premium? | USDA Risk Management Agency (RMA) |
| What is the premium used for? | To cover the cost of forage, destocking, depopulating or other actions that can be incurred during dry periods |
| How often are indemnity payments issued? | Automatically, typically sent around four months after the end of the covered index interval |
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What You'll Learn
PRF insurance is not drought insurance
Pasture, Rangeland, and Forage (PRF) insurance is a federal area-based program designed to protect a producer's operation from forage loss risks due to a lack of precipitation on acres grown with the intended use of grazing or haying. It is a pilot federal crop insurance program administered by the USDA Risk Management Agency (RMA) and sold through private crop insurance companies.
PRF insurance is based on a rainfall index that uses National Oceanic and Atmospheric Administration Climate Prediction Center (NOAA CPC) data. Each grid covers an area of 0.25 degrees in latitude by 0.25 degrees in longitude, and producers select at least two two-month periods where precipitation is critical. The insurance covers a single peril—lack of precipitation—and payments are determined by the grid's rainfall data, not individual farms or weather stations.
Producers receive indemnity payments when rainfall in their area falls below the normal historical level, and these payments are typically issued 60-90 days after the interval ends. While PRF insurance does not directly address drought conditions, it helps producers manage their operations during fluctuations in moisture levels and protect their profits from the impact of below-average rainfall.
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PRF insurance is a federal area-based program
Pasture, Rangeland, Forage (PRF) insurance is a federal area-based program designed to help protect a producer's operation from forage loss risks due to a lack of precipitation on acres grown with the intended use of grazing or haying. It is a risk management tool that can help producers sustain their cattle and cover their increased costs for feed, destocking, depopulating or other actions that can be incurred during dry periods.
PRF insurance is available in the 48 contiguous states, excluding a few grids that cross international borders. The Rainfall Index uses National Oceanic and Atmospheric Administration Climate Prediction Center (NOAA CPC) data, and each grid covers an area of 0.25 degrees in latitude by 0.25 degrees in longitude. Acres are assigned to one or more grids based on the location to be insured. A producer must select at least two two-month periods where precipitation is most critical to their operation. These periods are called index intervals.
PRF insurance policies can include coverage levels from 70% to 90% in 5% increments. Producers choose their coverage periods to align with times when precipitation is most important to their operations. They also select a productivity factor to match the protection amount to the value that best represents the productive capacity of the producer's acres. Policyholders are billed for insurance premiums the year after they sign up for PRF insurance, and the federal government subsidizes more than half of the premium cost.
PRF insurance is a valuable tool for producers who want to protect their operations from the financial impact of forage losses caused by lower-than-average rainfall. By understanding the historical rainfall indices for an area, producers can make informed decisions about enrolling in PRF insurance and choosing the right coverage months.
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PRF policies are available in two-month periods
Pasture, Rangeland, and Forage (PRF) insurance is available in two-month periods, also known as index intervals. Producers must select at least two of these periods where precipitation is most critical to their operations.
PRF insurance is designed to safeguard livestock producers against the financial impact of forage losses caused by lower-than-average rainfall. It is a federal area-based program that replaces income lost due to low precipitation on acres grown for grazing or haying.
The flexibility of choosing the months to insure against low rainfall allows for different types of forage production systems to be covered. This means that producers can align their coverage periods with the times when precipitation is most important to their operations.
PRF policies can include coverage levels from 70% to 90% in 5% increments. Producers also select a productivity factor between 60% and 150% to match the protection amount with the value that best represents the productive capacity of their acres.
PRF insurance is available in the 48 contiguous states of the US, with the exception of a few grids that cross international borders. The Rainfall Index uses National Oceanic and Atmospheric Administration Climate Prediction Center (NOAA CPC) data, and each grid covers an area of 0.25 degrees in latitude by 0.25 degrees in longitude.
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PRF insurance is available in 48 contiguous states
Pasture, Rangeland, and Forage (PRF) insurance is available in 48 contiguous states in the US. The insurance is designed to protect a producer's operation from the risks of forage loss due to a lack of precipitation. It is a federal area-based program that helps protect a producer's operation from forage loss risks due to a lack of precipitation on acres grown with the intended use of grazing or haying.
PRF insurance is a useful risk management tool for cattle producers, helping them sustain their cattle and avoid herd liquidation. It is not drought insurance, but it does provide coverage for a single peril—a lack of precipitation. The insurance payments are determined using National Oceanic and Atmospheric Administration Climate Prediction Center (NOAA CPC) data for the grid(s) and the chosen index interval(s). The grids cover an area of 0.25 degrees in latitude by 0.25 degrees in longitude and do not follow county or township boundaries.
PRF insurance is available in two-month periods, with coverage levels from 70% to 90%. Producers can choose their coverage periods to align with times when precipitation is most critical to their operations. They also select a productivity factor to match the protection amount with the value that best represents the productive capacity of their acres. Policyholders are billed for their insurance premiums in September of the following year, and the federal government subsidizes more than half of the premium cost.
PRF insurance is a valuable tool for livestock and forage producers in the Midwest, where it is underutilized. It provides flexibility in insuring different types of forage production systems, allowing producers to choose the months they want to insure against low rainfall. By enrolling in different months, producers can affect the total premium paid, the amount and frequency of indemnities collected, and the overall management of forage production risk.
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PRF insurance is underutilized by livestock and forage producers in the Midwest
Pasture, Rangeland, and Forage Rainfall Index (PRF-RI) insurance is a crop insurance product that is underutilized by livestock and forage producers in the Midwest, and more specifically, in Illinois. In 2024, only 6% of eligible acres in Illinois were insured, which is much lower than the uptake west of the Mississippi.
PRF insurance is a federal area-based program designed to protect producers from forage loss risks due to a lack of precipitation on acres grown for grazing or haying. It is essentially crop insurance for hay, and coverage is based on local rainfall indexes. Producers are not required to insure all their acres, and they can choose a productivity factor of 60% to 150% to match the protection amount to the value that best represents the productive capacity of their acres.
The PRF program issues indemnity payments automatically based on a producer's chosen grid area rainfall index. These payments are typically sent around four months after the end of the covered index interval. The rainfall index is based on National Oceanic and Atmospheric Administration (NOAA) data, and each grid covers an area of 0.25 degrees latitude by 0.25 degrees longitude (roughly 17 miles by 13 miles in Illinois). While PRF insurance is not drought insurance, it can help protect against the impact of below-average rainfall, which can lead to reduced forage production.
The low uptake of PRF insurance in the Midwest may be due to a lack of awareness of the benefits of the program or a perception that the insurance is not worth the cost. However, PRF insurance has been shown to be a valuable risk management tool for livestock and forage producers. On average, Illinois producers received $1.29 in indemnities for every $1 spent on PRF-RI premiums, and the federal government subsidizes more than half of the premium cost.
Overall, PRF insurance is a valuable tool for livestock and forage producers in the Midwest to manage the risk of forage loss due to a lack of precipitation. By insuring against below-average rainfall, producers can protect their operations and maintain herd sizes during dry years.
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Frequently asked questions
Pasture, Rangeland, and Forage (PRF) insurance is a federal area-based insurance program designed to protect a producer's operation from forage loss risks due to a lack of precipitation.
PRF insurance is available in two-month periods, with coverage levels from 70% to 90%. Producers choose their coverage periods based on when precipitation is most important to their operations. Insurance payments are determined using National Oceanic and Atmospheric Administration Climate Prediction Center (NOAA CPC) data for the chosen grid(s) and index interval(s). When the final grid index falls below the policyholder's "trigger grid index", the producer may receive an indemnity payment.
PRF insurance is designed for livestock and forage producers, particularly those in the Midwest, who want to safeguard against the financial impact of forage losses caused by lower than average rainfall. It is also suitable for cattle producers who raise feed crops such as pasture, alfalfa, and other forage crops.
PRF insurance can be worth considering for eligible producers as it provides a risk management tool to help sustain their operations during periods of low rainfall. It can replace income from yield losses and protect profits from the financial challenges posed by droughts. However, it is important to note that PRF insurance does not cover all drought-related risks, such as abnormally high temperatures or windy conditions. When deciding if PRF insurance is worth it, producers should weigh the benefits against the costs and consider how their production correlates with historical average rainfall patterns for their area.
