38 Nebraska Cattleman November 2023 1/4 Horizontal Nebraska Cattleman 4 color Commodity Solutions June 2021 Commodity Solutions, Inc. Serving Nebraska’s Cattle Producers • Grain & Livestock Hedging • Feed Commodity Broker • Corn Procurement Services • Cattle Hedge Accounting Humphrey, Neb. 402-923-0264 www.commoditysolutions.com Norfolk, Neb. 402-371-3151 Atmospheric Administration (NOAA). They compare current data collected to historical data to determine if specific grids are above or below average on annual rainfall. Grids can vary in size, but for example, in eastern Nebraska the grids are approximately 12 miles wide from east to west, and 60 miles north to south. Putting PRF to Work “If producers are going to use PRF as a tool on the operation, that should be a strategic decision, meaning it's something that they should do every year,” Parsons says. “It's not something that they should bounce in and out of, because that's basically saying that they think they can outcast Mother Nature and that's usually not a good plan.” When customizing your PRF plan to your specific operation, there are multiple approaches that you can take. The insurance is broken into two-month intervals throughout the year and can be applied to ground used for haying or grazing. “Some producers prefer to spread it out. I call that kind of a base strategy where you spread it out throughout the year, cover all the months a little bit,” Parsons explains. “In that type of strategy, you generally don't go many years where you don't get some indemnity on it, and although it doesn't always cover your premium, in most cases it is going to cover your premium over half of the time.” Producers are not required to insure all their acres, rather they can choose the acres most important to their operation. They will need to select at least two, two-month intervals per year that do not overlap. Once the intervals are determined, a coverage level is then selected in 5 percent increments between 70 and 90 percent. Plans are further customized by choosing productivity factors ranging from 60 to 150 percent. “Some people tend to focus on either a growing-season strategy or some of them go for the big payoffs in the winter months, which are actually months that are pretty easily to be a percentage below the expectation because there's not a lot of moisture in the winter months, relative to say the spring months, but they cost a lot more to insure,” Parsons says. “I generally tell people to go for something that makes sense for them in terms of the growing season or to go with kind of a base strategy and spread it out.” If you are wondering how to best determine which months you should choose for your area, data is available for the last 70 years where you can see average rainfall as well as how the insurance paid out. At the end of the insurance periods, a final grid index will be issued for each index. The U.S. Department of Agriculture’s (USDA) Risk Management Agency (RMA) has developed a decision support tool that CONTINUED ON PAGE 40 HEDGING BETS • CONTINUED FROM PAGE 36 Pasture, Rangeland, Forage Insurance NEBRASKA Summary Source: USDA_RMA, Summary of Business, Sept. 18, 2023 Pasture, Rangeland, Forage Insurance NEBRASKA Summary
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