North Dakota’s top agriculture official is asking the federal government to consider adding another wrinkle to a new insurance program that pays ranchers based on rainfall or the greenness of their pastures.
The Risk Management Agency, which oversees crop insurance, already has made radical changes to the fledgling program across the country, and says it will at least consider Agriculture Commissioner Doug Goehring’s request to give North Dakota producers more options for insuring hay and rangeland.
“We want to get this right for the long term,” said Tim Hoffmann, RMA’s director of product administration and standards.
The Pasture, Rangeland and Forage Insurance Pilot Program began in 2007 at the urging of Congress as a way to give ranchers a way to protect against risk. Livestock producers traditionally have not been able to get crop insurance because unlike grain, pastures and forage cannot be measured in such terms as bushels.
Instead, the new program — which is available in 18 states — uses either a rainfall or vegetation index, depending on the area of the country. Whether landowners get a payment depends on the amount of rainfall or the amount of greenness.
Texas A&M University officials who developed the program for RMA split the country into six zones to test the indexes in each. North Dakota was assigned the rainfall index, and Goehring said it isn’t working.
Central and western North Dakota, where the insurance program is available, do not have enough National Weather Service reporting stations, he said. And some of the reporting stations submit data only when it rains, skewing the index, he said.
“The insurance claims of some producers will be denied because the index erroneously shows that their operations have had adequate moisture,” Goehring said.
The commissioner said he met with officials from the weather service and understands how hard it is to find weather observers in rural areas. He is trying to persuade RMA to give North Dakota ranchers the option of basing their policy on either the rainfall index or the vegetation index, which uses satellite imagery from the U.S. Geological Survey to measure greenness.
“I just want to make sure producers get a fair deal out of this,” he said. “The more options to insure the way they need to gives them more opportunities to insure wisely versus just paying a premium and maybe never collecting.”
RMA data show that during the first two years the program was offered in North Dakota, it paid out on more than 85 percent of policies for a total of more than $4.7 million. It is not known what the policies would have paid under the vegetation index.
Hoffmann said RMA already has made index changes in all or parts of 11 states, either at the request of ranchers or after studies of how well the program was working. But while three states have rainfall and vegetation indexes in separate areas, nowhere in the country do ranchers have a choice of which index to use, as Goehring is seeking.
“We’re not opposed to looking into that,” Hoffmann said. “We’re clearly willing to listen.”
He did not have a timeline for when a decision might be made.
Goehring said he also plans to meet with members of the state’s Atmospheric Resource Board to see if that agency’s reporting stations could be included in the North Dakota weather service data used by the insurance program.
“I’d just like to make sure that we have a good product before
we have more and more producers accessing it,” the commissioner
said.
Topics Agribusiness
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