Two New Insurance Tools

August 11, 2006 - Agriculture Secretary Mike Johanns on Monday announced the availability of two new risk-management tools for pasture, rangeland and forage, beginning with the 2007 crop year.
The new insurance products, the rainfall index insurance program and the vegetation index insurance program, are offered by the Risk Management Agency (RMA) and will be available through approved insurance providers. These programs will provide livestock producers the ability to purchase insurance protection for losses of forage produced for grazing or harvested for hay.

The rainfall index insurance program will be pilot tested in 220 counties in Colorado, Idaho, Pennsylvania, South Carolina, North Dakota and Texas and is based on rainfall indices as a means to measure expected production losses. The vegetation index insurance program will be pilot tested in 110 counties in Colorado, Oklahoma, Oregon, Pennsylvania, South Carolina and South Dakota and is based on satellite imagery that determines the productivity of the acreage as a means to measure expected production losses.

Both insurance products are designed to allow maximum flexibility for the producer. For instance, producers are not required to insure all their acres, but may elect to insure only those acres that are important to their grazing program or hay operation. Further, producers are not required to insure the acreage for the entire crop year. The crop year is divided into intervals and producers may elect to insure their acreage for only those intervals where the risk is the greatest.

Both of these products will be available for sale from crop insurance agents beginning in late August 2006. The sales closing date is Nov. 30, 2006. More detailed information about these two new pilot programs is available on the RMA Web site at: www.rma.usda.gov/policies/pasturerangeforage/.

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