Pilot program covers grazing, hay lands
Riverton – In late February the UW Cooperative Extension Service of Fremont County hosted a workshop concerning the management of ag enterprises during times of uncertain input costs.
One aspect on which the workshop focused was insurance offered by the USDA’s Risk Management Agency (RMA), including Livestock Risk Protection, AGR-Lite insurance for whole farm/ranch revenue protection and a pilot insurance program – Pasture Range Forage Vegetation Index Insurance.
“The pasture range and forage product is a pilot insurance program that provides protection against losses of forage on grazing and or hay land,” said Vince Smith of the Montana State University Department of Agricultural Economics.
The pasture and forage insurance is available in all Wyoming counties, and it is available on land leased from the federal government.
“In agriculture insurance this is what we call an area yield product,” said Smith. “This is not a product specific to your own acreage, and most area yield products with which you’re familiar are based on county-wide performance of a crop, but this is based on a much smaller area.”
The pasture and forage insurance is based on a grid system, with each grid measuring 4.8 by 4.8 miles. The Normalized Difference Vegetation Index (NVDI) is the basis for the product.
“The NVDI is made up of satellite information adjusted for actual temperature on the ground, and it’s used to indicate the amount of forage production on your grazing or hay land,” said Smith.
The U.S. Geological Survey Earth Resource Observation and Science Data Center provides the satellite vegetation data, while the National Oceanic and Atmospheric Administration (NOAA) provides the average daily temperature data.
“The information for this product comes straight from satellites for very narrowly defined areas, and the index is based on reflection measurements that indicate the amount of vegetation on a particular piece of ground,” explained Smith. “It’s pixel data – pixels of color recorded by the satellites. The visible light values are sensitive to the amount of green chlorophyll in a plant that can absorb light, while infrared light senses the amount of plant cells in a leaf. That all gets reflected back and provides an assessment of how much green stuff there is on the ground – or how much plant growth has occurred.”
However, because sometimes vegetation will remain green when it’s not growing, as in very hot or cold temperatures, the raw satellite vegetation index data have to be adjusted using on-the-ground temperature measurements. The satellite images are also adjusted for elevation.
Smith said producers need to recognize that because it’s a group risk product, they may have low forage production on their acreage and still not receive a payment. “Their land is only a part of the area to which this product applies, but the flip side also applies, in that they may get a payment when, on their particular acreage, they had a good year.”
Which grid the acreage becomes a part of depends on the geographic point of reference on the land chosen by the producer. “Often your land will run over more than one grid, but as long as you’ve got a point within one grid you can insure all the contiguous land as well,” said Smith. “If you have two pieces that are widely separated you can insure them in different grids.”
Another component of the insurance product is that the crop year, beginning April 1, is divided into four index intervals, each with its own NVDI. A producer can choose whether he wants to insure all of his acreage in one interval or spread it throughout the year.
Each NVDI index is normalized, with 100 representing average vegetation growth. If the NVDI falls below 100 during an insured interval an insured producer will likely get an indemnity, says Smith.
The coverage is also based on the county base value – or the production value of grazing or hay land in the county, which is determined by RMA. “Grazing and hay land have very different county base values,” said Smith. “In Fremont County the base value for grazing land is just under nine dollars an acre, while the value for hay land is nearly $200 per acre.”
If a producer has irrigated hay meadows that produce more than $200 per acre, there is a productivity factor by which he can adjust the base value up.
According to Smith, the subsidies on the product make it very attractive. “It’s like going to Vegas and betting a dollar and knowing, on average, you’ll get two bucks back,” he noted. “That doesn’t mean you’ll get paid every year, but on average over 10 years you’re likely to get more back than you put in, plus the years when your forage is poor.”
The sign-up date for Pasture Range Forage Vegetation Index Insurance is Nov. 30, the date on which the chosen land must be entered into an index interval.
For more information on Pasture Range Forage Vegetation Index Insurance, contact Vince Smith at 406-994-5615 or firstname.lastname@example.org. For more information on the NVDI visit the RMA website at www.rma.usda.gov/policies/pasturerangeforage/. Christy Hemken is assistant editor of the Wyoming Livestock Roundup and can be reached at email@example.com.