Federal insurance program "frustrating"
A relatively new federal pilot insurance program for pasture, rangeland and forage acres was discussed at length at a meeting with ag producers, political leaders and federal officials on Monday.
The Pasture, Rangeland, Forage Pilot Insurance Program (PRF) is aimed at providing insurance on those acres, but in practice there remains a lot of variables and a lot of unknowns about the program.
For that reason, officials said area farmers may want to be aware of that before they put in their investment.
"There's more of a risk in jumping in and out of something. You really have to look at these risk management tools as a long-term goal," North Dakota Agriculture Commissioner Doug Goehring said at the meeting with federal Risk Management Agency officials.
"You buy insurance and maybe it won't always pay out, but the hope is that when you do have an issue it'll pay out. The concern here is that when you have an issue, it isn't always paying out. Goehring said.
The Risk Management Agency, a division of the U.S. Department of Agriculture, led the public meeting to receive feedback on their pilot insurance program.
U.S. Rep. Kevin Cramer, R-N.D., was the host of the meeting and Q&A, and he came away from the meeting with plenty of food for thought as he tackles renegotiating the federal Farm Bill in Washington.
"An extreme moment like this is what really tests the viability of these products," Cramer said, referencing the current drought crisis. "(Congress) is right in the middle now of renegotiating another Farm Bill, so to the degree that legislation is required you've given us a lot to think about."
Both Cramer and Goehring found causes to be critical of the pilot program, which suffers from a perceived lack of accuracy in its reporting and inconsistency in when it pays out to those who buy into it.
"I'm not saying it is perfect. I'm a little frustrated with it myself," Goehring said. "Even in the crop insurance side of it, where I'd probably claim more...there's years I'm a bit frustrated at how it pays out."
Cramer, in particular, came away with concerns as to how effective adjusting a national program to local issues really was.
"At the heart of this matter, to me, is to have this national, ubiquitous program and have it applied out here in the vast west," he said. "We see it applied in so many areas...to me, to be honest this just raises the question of the viability of the whole product."
The insurance program bases how much it pays on percentages of rainfall, which are measured by rain meters located in and around "grids."
The tools available online (maps.agforceusa.com/api/ri/) are quite comprehensive, allowing farmers to calculate their historical rain indices going back as far as 1948. They can put in all the relevant information to determine how much their premiums will be for which months they decide to insure, with 11 choices for two-month periods of insurance. They can see how much their premiums will be, how much they'll likely receive and more.
The tools were one of the areas of the program that drew praise.
"I like the technology they have available now in that it will give you an opportunity to look at years of data, you can plug your own numbers in for that specific grid, I think that's one of the best tools you can use," Goehring said. "If you're in an area where you don't think you're getting the best data...stay out of it. Right now, though, it looks like if you acquire this product and stay in it for the long term it's probably going to average out."
He echoed a refrain given even by members of the RMA itself, in response to how variable topography can impact the accuracy of climate data. That lack of accuracy is a problem, Goehring said, as premiums can be quite costly—up to $60,000.
John Lockie, a risk management specialist for the RMA, responded.
"If you crunch the numbers and it doesn't fit, don't buy it," He said. "Because all you're going to do is call me and be mad. It's not forced on you."
Lavy Steiner, a senior ag industry specialist with Wells Fargo, described herself as an insurance agent and spoke to the frustrations voiced by her clients.
"We know there aren't enough reporting stations. I've seen my producers who all say 'this information isn't accurate.' It's hard to say that, because it's using the basis from 1948 to today...(but) every single person in this room who carries a policy will tell you that we get payments when we shouldn't and vice versa."
Ultimately, the best advice for anyone interested in participating in the PRF insurance program is to use the available tools to get the most information you can about your individual area, and with that informed decision, be prepared to put in a time investment.
"Like with any program you have to get in it and you have to stay in it. Insure for the months where you really need to have the coverage and go from there," Goehring said.