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Just Your Standard Bull

published: July 9th 2010
by: Michael Sturgess

Just about the time I think I have something figured out, someone or somebody throws me a curve ball! Last week—on June 30th to be precise—the USDA’s Risk Management Agency (RMA) announced that the Pasture, Rangeland, Forage (PRF) Program was expanding for the 2011 crop year. They expanded the coverage area to include the states of California, Arizona, New Mexico, Utah, Florida and Georgia. And the biggest news to Texas? The program has expanded to include all counties of the state!
    That’s right. The same program the was made available to the South Texas, Hill Country, Central Texas and North Texas regions of the state since 2007 has been expanded to include far West Texas, The Texas Panhandle, the Coastal Plains and East Texas. This is great news for producers in these areas because it really does help producers in taking out the risk out of what you can’t control… rain!
    South Texas producers in particular can testify to the fact that during perhaps the worst two-year droughts in Texas history (from September of 2007 to September of 2009), that the PRF policy really made a difference in their operations. Customers not only received much needed help, they received it when they needed it—not a year or year and a half later.
    If you follow this column, then you know that both myself and partner Jim Banner are licensed Silveus Rangeland Specialists and have been so since the PRF program began in the Fall of 2006. We work closely with each of our customers to provide a customized plan of coverage suited particularly for their individual needs. We have the training, software, resources and subject knowledge to provide the best service possible. Most agents in the field who offer this program are trained to provide crop insurance. This is where we differ. If you want crop insurance, we have several associates who work with us who are experts in those areas. We would be happy to refer them to you. But if you want Pasture, Rangeland, Forage (PRF) insurance, we hope that you will consider putting your trust with someone who knows how you operate. Someone who has dedicated their professional careers to serving cattle producers. Then I hope you will give us a call.
    Last year, several changes were made to the policy that became effective for the 2010 policy. One of the biggest changes had to do with how they estimated rainfall in each 12 x 12 mile grid. The old method that the 2007-2009 policies fell under was called the Cressman Method. For 2010 and beyond, they use the Standardized Interpolation Method, which is believed to be a more advanced and accurate method of estimating rainfall. The older method tended to overestimate incidences of low rainfall and underestimate high rainfall events. What this all means to you and I is this. Since there is not an official weather station every 12 miles, then the National Oceanic and Atmospheric Administra-tion (NOAA) needed to devise a scientific method to use all available information and interpolate the data to estimate rainfall falling in every 12 x 12 mile grid in the United States.
    So far, the data we have seen for the first five months ending in the month of May looks to be more accurate with the new Standardized Interpolation Method. Last year, there were a number of index intervals that came in with estimates in a few counties that appeared to overestimate incidences of low rainfall. Again, so far the data looks much better.
    Another change to the 2010 policy was increasing from 6 to 11 index intervals. While a customer may choose to insure in as little a 2 or as many as 6 intervals, he or she now has the added flexibility to combine the months differently. For example, I will use three of the new intervals: Interval 3 – March-April; Interval 4 – April-May; and Interval 5 – May-June. Historically, Interval 3 may be more volatile in your area than Interval 4 or Interval 5, whereas a producer from another area may find that Interval 4 is more volatile than Intervals 3 or 5. With the old policy, three Intervals along the same time period looked like this: Interval 2 – February-March; Interval 3 – April-May; and Interval 4 – June-July. With the new policy, it is much easier to tailor a plan of insurance that works for you, your area and your management style. A customer may choose any interval, but may not insure the same month twice. In other words, a producer could choose Intervals 2,4 and 6; or he may choose Intervals 3, 5 and 7; but he may not choose Intervals 3, 4 and 5 because he would be insuring the months of April and May twice.
    In the coming months, I encourage you to watch for updates in these pages as we near next year’s sales closing date of September 30. I also encourage you to go to the following web sites for the latest developments in the PRF policy. Please go to www.southernlivestock.com and www.rangelandinsurance,com for more information. Or please feel free to call Jim Banner or myself at the office. Our office number is (210) 524-9697.