LRP & PRF
Livestock Risk Protection & Pasture, Rangeland, Forage
Livestock Risk Protection (LRP) and Pasture, Rangeland, Forage (PRF) insurance plans are agricultural insurance programs in the United States. LRP provides coverage against market price declines for specific classes of livestock, helping farmers mitigate financial risks.
PRF insurance protects ranchers and livestock producers against income losses caused by adverse weather conditions that affect their grazing and forage lands. These programs aim to safeguard the economic stability of agricultural operations by offering risk management tools for livestock and forage-related challenges.
PRF
Pasture, Rangeland, Forage Insurance
The Pasture, Rangeland, Forage (PRF) Insurance Program is designed to provide insurance coverage on your pasture, rangeland, or forage acres grown for the intended use of grazing by livestock or haying.
This program gives you the ability to buy insurance protection for losses of forage produced for grazing or harvested for hay that result in increased costs for feed, restocking, and depopulating.
The PRF insurance plan is a risk management tool designed to insure against a decline in Rainfall Index values. This index is based on the long-term, historical, average precipitation for the same area of land for the same period of time. It does not measure, capture, or use the actual crop production of any producer or any of the actual crop production within the area.
Pasture, Rangeland, Forage insurance was designed to help protect your operation from the risks of forage losses that are produced for grazing or harvested for hay resulting in increased costs for feed.
You are not required to insure all your acres, and you cannot exceed the total number of grazing or haying acres you operate. The program provides protection while allowing you to insure only those acres that are important to your grazing program or hay operation. By selecting a productivity factor, you can establish a value between 60% and 150% of the county base value and match the amount of your protection to the value of forage that best represents your specific grazing or hay operation.
The Rainfall Index uses National Oceanic and Atmospheric Administration Climate Prediction Center (NOAA CPC) data.
4 Considerations to maximize your PRF Coverage
1
PRF does not measure the actual crop production of any farmer or any of the actual crop production within an area. Indemnity payments are earned only when the Final Grid Index is less than the Trigger Grid Index.
2
PRF uses the long-term, historic, gridded precipitation data for the grid ID and index interval. Farmers should carefully review the historical experience of each grid ID and Index Interval.
3
Selection of the appropriate index interval(s) is critical. Farmers must select the index intervals that included the time period when precipitation is needed to produce grazing and/or haying forage under normal conditions.
4
The gridded precipitation data is an interpolated value for the entire grid and cannot be traced to a single point or reporting station. The precipitation receive by a farmer at a specific location may not match the Final Grid Index.
Other considerations
» PRF uses a numbered grid system where each grid is approximately .25o in latitude by .25° in longitude, and does not follow state, county, or other geopolitical boundaries.
» You must select at least two, two-month periods when precipitation is important to your operation. These periods are called index intervals.
Buying a
PRF Policy
You can buy a PRF ProAg policy from us here at Ag Risk Management by the sales closing date shown for each county in the actuarial documents. And is available in the 48 contiguous states with the exception of a few grids that cross international borders. For most states and counties, the sales closing date is December 1.
Coverage and Claims
Your potential insurance payments are determined by using NOAA CPC data for the grid(s) and index interval(s) you have chosen to insure. Indemnity payments are earned by eligible policyholders when the Final Grid Index is less than the result of multiplying the Expected Grid Index by the coverage level selected by the policyholder, which is referred to as the Trigger Grid Index. This insurance coverage is for a single peril, lack of precipitation. It does not cover other perils such as, but not limited to, flood, fire and hail. It is not based on individual farms or ranches or specific weather stations in the general area.
Because PRF is an area insurance plan and does not measure, capture or use any actual crop production, an eligible policyholder may experience a production loss and not receive an indemnity payment. However, it is also possible for an eligible farmer or rancher to receive an indemnity payment without suffering a loss of actual production. The farmer’s amount of production is not considered and no on-the-ground inspection of crop conditions is conducted to determine eligibility for an indemnity payment.
LRP
Pasture, Rangeland, Forage Insurance
Livestock Risk Protection (LRP) insures against declining market prices (based on USDA’s Agricultural Market Service). LRP insurance is similar to a put option, allowing producers to establish a floor price for protection while leaving upside price potential open. Unlike market contracts and options, LRP does not require a margin account or broker, it is closer to the actual ending value of the livestock and is based on cash market index prices rather than the futures market. This federally sponsored program typically costs less than other options, is often perceived more favorably by lenders, and may provide additional benefits in terms of lending rates or loan availability.
LRP insurance protects your investment should prices drop before your livestock gets to market while preserving your upside potential.
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Available for fed cattle and feeder cattle
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Coverage level options ranging from 70-100% of the expected ending market value of animals
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Flexibility of number of head you can insure
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Feeder Cattle – 12,000 head per endorsement/25,000 head annually
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Fed Cattle – 12,000 head per endorsement/25,000 head annually
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Coverage can be extended to unborn calves, including those operations with multiple entity structures